Based on data from the Central Bureau of Statistics, in 2017 Indonesia’s export value to the United States was USD 18,630,866,511. This value rose 9.68% compared to the 2016 export value of USD 16,987,173,614. In addition, this value is also much higher than our import value from the United States of USD 8,121,665,168 in 2017. The export value obtained by Indonesia comes from the trade of several local products such as garment, food, agricultural products and livestock, leather and products leather and electronic products and optical products.
As a country that adheres to the economic system mixed capitalists, the United States certainly does not want the trade balance to be minus because the country’s import value is greater than the export value. They also questioned why his country had to import these products instead of trying to produce the products themselves. In addition, product import habits can also cause underpricing. Where the selling price is lower than the market price of the product.
Based on this thought, the United States considers and reviews trade relations with Indonesia and provides special tariffs for Indonesian export products. So that it is more balanced between imported products and exported products. This action will certainly have an impact on the increase of import duties on Indonesian products to America. Indonesia, which does not want to experience losses from the export side, finally does the same. So that the trade war between Indonesia and the United States cannot be avoided.
The negative impact of this can affect the business sector and the economy of Indonesia and even the world. Because as you know, when there is a trade war between the two countries, it will reduce both countries’ exports and imports, and will directly reduce the volume of world trade.
There are conflicting opinions between the two countries. The economy of the United States which is currently growing high feels that they have the ability to put pressure on Indonesia.
However, according to the Minister of Trade of the Republic of Indonesia, Mr. Enggartiasto Lukita, Indonesia is able to compete with the United States. Because, although it is still a developing country, Indonesia’s strength in terms of trade cannot be underestimated.
If examined more deeply, from BPS data it is known that garment products make the largest contribution to Indonesia’s exports to the United States of USD 4,848,476,000 or 26.02%. Followed by food products in the second place with a value of USD 3,479,951,000 or 18.68%, then agricultural and livestock products amounted to USD 1,501,607,000 or 8.06% in third place. In the fourth place, there are leather and leather products of USD 1,472,297,000 or 7.90% and in the fifth place, there are exports of computers, electronic products, and optical products worth USD 1,047,345,000 or 5.62%. The rest is contributed by around 30 groups of goods, each worth under USD 1 billion.
Meanwhile, Indonesia’s imports from the United States were dominated by Oil Seeds Use For Extraction Of soft Fixed Vegetable Oils of 13.96% or USD 1,133,896,759, then animal feed and pet products of 6.90% or USD 560,513,334. In the third order, there was the cotton of 6.32% or USD 513,218,507, in the fourth place there was propane and liquid butane product of 4.53% or USD 367,604,582 and in the fifth place, there was a Pulp and Waste Paper of 4.39% or USD 356,850,603.
From these data, it can be seen that Indonesia exports goods including primary needs to America. Of course, it will not be easy for them to find substitute products or substitute countries that are able to meet their needs. We take the example of textile and garment products. At present, Indonesia and Vietnam and China are the biggest exporters of these products in the world. If the US does not use products from Indonesia, then the next choice is China. But it seems that this is not possible, considering that between the US and China there has been a tension and trade war. Likewise with Vietnam, although previously Vietnam had entered into the Trans-Pacific Partnership Agreement (TPP) which made its product duties to the US market reduced, even to zero percent. But considering the US is having an unfavorable relationship with several developing countries, it is likely that they will only use products from countries other than the top three. Where the export volume is not necessarily enough to meet the needs of the American market.
Meanwhile, products imported by Indonesia from America are secondary or even tertiary goods. Launching the page www.statista.com, the United States is not the largest country producing or exporting these products. So, if there really is a trade war between the US-RI, Indonesia can still find alternative countries to meet those needs. In fact, with the existing natural resources, Indonesia can produce these products itself. Only need to be improved in terms of technology and experts.
So, there is an opinion that if there really is a trade war between the US-RI, the impact will be very broad for the United States. Meanwhile, its influence on Indonesia is more on the economic sector. Where tensions between the two countries will lead to a monetary policy response in the United States, which makes interest rates higher and risks in financial markets also higher. These conditions can encourage investors to attract capital from developing countries, including Indonesia. Therefore, coordination between the government, BI, OJK, and related ministries must continue to be done to ensure the resilience of the Indonesian economy is strong and stable. And preparing a strategy to strengthen Indonesia’s financial markets.