RI Braces For Looming US Trade War
Indonesia is preparing for heightened trade barriers in the United States as the world’s biggest economy steps up its fight against a trade deficit and enforces what it claims to be fair trade.
US President Donald Trump set import duties of 25 percent on steel and 10 percent on aluminum last Thursday. The new arrangement is scheduled to take effect 15 days following the affect all of its trade partners, excluding Canada and Mexico.The European Union, for instance, has revealed its intention, to retaliate, targeting a set of key US products, from whiskey to motorcycles.
Indonesian Iron and Steel Industry Association (IISIA) executive director Hidayat Triseputro said the local industry might soon
feel the impact of the US policy and therefore, metal manufacturers would rely heavily on the government to help them contain the diverted steel exports from other manufacturing countries, especially China.
Such a condition might also be worsened by the recently passed Trade Ministerial Decree No. 22/2018, which exempts imported steel from technical supervision by the Industry Ministry and allows post-border inspection instead of thorough checks prior to the entry of imports to the country.
In response to the development, the group demanded that government address a loop-hole in steel’s classification under a harmonized system (HS), which would relieve import duties on steel if more alloy and other particles were added to them.Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman Shinta W. Kamdani highlighted lobbying as key to overcoming the matter.
On the other hand, domestic steel manufacturers, along with iron and aluminum, should be able to reap more opportunities from the
situation by further diversifying their products, even though high production cost still pose challenges, she added. The EU and Japan are in talks with the US for exemptions from the newly passed import tariffs.
However, Trade Ministry’s foreign trade director general, Oke Nurwan, told the *Post *that Indonesia would not be affected much by US metal tariffs as the former did not export a significant amount of such products to the US. Indonesia’s iron and steel exports amounted to U$1.83 billion in 2016, while overseas shipment to the US totaled only $26.26 million, according to the latest data from the Geneva-based Trade Map.Prior to the US’ latest move to enact trade barriers, Indonesia faced allegations of unfair trade practices in the former, affecting products such as biodiesel.
Last April, the US administration put Indonesia on its trade watch list along with 15 countries as the former had suffered a significant
deficit and aimed to step up its measures against trade imbalance. Indonesia posted a $9.67 billion surplus from its trade with the US last year, widening by 9.3 percent year-on-year, according to data from the Trade Ministry.
Meanwhile, strategic issue observer, Toni Ervianto has said every countries must ready if trade war will be abrauptly happened, because trade war is a part of to defence national economic interest among countries. Indeed, an economic cooperation and collaboration at the millennial era’s will be firm, so the government of Indonesia must always ready too to face a trade war which will declare from other countries.
*) Bayu K/Ertama