TEMPO.CO, Jakarta - Syafruddin Karimi, an economist from Andalas University, has urged the Indonesian government to exercise caution about potential trade diversion following the agreement between the United States and China to reduce import tariffs. He cautioned that this agreement could diminish some of Indonesia's existing export opportunities.
"With the normalization of trade relations between the U.S. and China, certain export opportunities that have benefited Indonesia due to tariff disruptions may now be reclaimed by China," Syafruddin said in a written statement on Monday, May 12, 2025.
Syafruddin emphasized the need for the government to carefully consider its bilateral negotiation strategies and enhance domestic competitiveness to sustain the momentum of national trade. He noted that this agreement shows the continued relevance of diplomatic approaches in navigating global economic pressures.
Furthermore, Syafruddin suggested that the government should capitalize on the reduced trade tensions to expand export markets and strengthen its bargaining position within the global supply chain. He pointed out that the decrease in price pressures resulting from supply chain disruptions and the reduction in production cost increases caused by tariffs could provide Indonesian businesses with more competitive access to the global market.
In the manufacturing sector, Syafruddin indicated that opportunities to increase exports to both China and the U.S. could arise if these two nations begin seeking new trading partners to replace goods previously subject to high tariffs.
Prior to this agreement, China had been hesitant to engage in discussions, citing the Trump administration's tariff policies as unilateral coercion. However, concerns about the domestic economic impact, including a potential loss of up to 16 million jobs due to the cessation of trade with the U.S., compelled Beijing to adopt a more flexible stance.
Trump also displayed signs of conciliation, referring to an 80 percent tariff on Chinese goods as "seems right", significantly lower than the 145 percent that had been implemented. This suggests that political pressure and market volatility can foster compromise even in previously highly confrontational strategies.
The U.S. and China announced on Monday, May 12, 2025, their agreement to temporarily reduce reciprocal tariffs. As reported by Channel News Asia, the world's two largest economies are seeking to resolve the trade war that has destabilized global prospects and created uncertainty in financial markets.
U.S. Treasury Secretary Scott Bessent informed reporters that both parties had agreed to a 90-day suspension of the tariff actions. Additionally, tariffs will be lowered by over 100 percentage points to 10 percent.
"Both countries represented their national interest very well," Bessent said. "We both have an interest in balanced trade, the U.S. will continue moving towards that."
Sita Planasari contributed to the writing of this article.
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