ASSESSING THE IMPACT OF THE TRUMP 2.0 POLICY AND THE POTENTIAL OF INDONESIA’S TOP EXPORT COMMODITIES

Rudy Marhastari, Mha Ridhwa, Amelia A. Hidayat, Shinta Fitrianti, Desthy V.B. Sianipar, Ais Nisa M., Sulistiyo K. Ardiyono, Elpiwin Adela, M., Adamul Khair and Anna Setyawati
Additional contact information
Mha Ridhwa: Bank Indonesia
Amelia A. Hidayat: Bank Indonesia
Shinta Fitrianti: Bank Indonesia
Desthy V.B. Sianipar: Bank Indonesia
Ais Nisa M.: Bank Indonesia
Sulistiyo K. Ardiyono: Bank Indonesia
Elpiwin Adela, M.: Bank Indonesia
Adamul Khair: Bank Indonesia
Anna Setyawati: Bank Indonesia

No WP/02/2025, Working Papers from Bank Indonesia

Abstract: This study examines the direct and indirect impacts of the Trump 2.0 reciprocal tariff policy on Indonesia’s exports and identifies export opportunities and challenges amid rising global protectionism. Using granular HS 6-digit commodity data, the analysis maps priority export sectors most vulnerable to tariff shocks. A mixed-methods approach combines multicountry partial equilibrium and CGE-GTAP models to estimate direct effects, while Trade in Value-Added (TiVA) data capture indirect spillover effects through affected trading partners. Qualitative evidence from Focus Group Discussions and field surveys complements the quantitative analysis. The findings show that Trump 2.0 tariffs are likely to suppress Indonesia’s exports both directly and through global spillovers. However, significant opportunities remain through export diversification toward Europe, the Middle East, Canada, and Mexico, as well as through trade creation in strategic commodities such as palm oil, nickel, and rubber. The study highlights the need to accelerate downstream industrial development, strengthen strategic industrial ecosystems, and better align trade and investment policies to enhance Indonesia’s export resilience and competitiveness amid evolving geopolitical conditions.

Keywords: Reciprocal tariffs; export diversification; global value chain (GVC) (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2025
New Economics Papers: this item is included in nep-sea
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