November 19, 2024
JAKARTA – Protectionist trade policies under US president-elect Donald Trump’s incoming administration could cause slower growth and higher unemployment in Indonesia and Asia as a whole, analysts say.
Countries around the world have begun to prepare for Trump’s inauguration in January 2025, with many expecting dramatic policy changes and an escalation of the US-China rivalry.
In a public discussion hosted by Konrad-Adenauer-Stiftung (KAS) and the Center for Strategic and International Studies (CSIS) in Jakarta on Monday, experts and a representative from the Foreign Ministry debated the geopolitical impacts of the elections happening worldwide this year, paying particular attention the US’.
They predicted that geopolitical anxiety surrounding the US-China strategic competition would likely worsen in the coming years, with Trump expected to act more unilaterally on the global stage and attach less significance to ASEAN.
Trump, who ran on a nationalist, America-first platform, would likely turn the US into a more isolationist country, and Southeast Asian countries could see decreased engagement, foreign aid and foreign direct investment from the US going forward, experts at the discussion said.
“Indonesia and ASEAN are anxious over the prospect of a second Trump administration,” said Shafiah Muhibat of the CSIS.
“We are expecting a more unilateral, protectionist approach. The US may also be more assertive toward China, [which] will be very impactful for Indonesia and Southeast Asia,” she said.
This would be a departure from the administration of US President Joe Biden, who spent the first years of his leadership promising ASEAN stronger cooperation and a deeper friendship.
In 2022, Biden’s first post-pandemic, high-profile international event was to host a special ASEAN Summit in Washington, DC, just two weeks before announcing the Indo-Pacific Economic Framework (IPEF).
The conspicuous display of amity was widely perceived to be motivated by US concerns over China’s increasing economic stature and aggression in the South China Sea, as well as to make up for the US’ decreased presence in the region during Trump’s first administration.
Trump, widely seen as uninterested in ASEAN and preferring transactional, bilateral deals, will likely showcase similar tendencies during his second period, speakers at the Monday discussion said.
The Foreign Ministry estimates slower economic growth across Asia for the 2025-2026 period, including a 0.3 percentage point decline from initial projections for Indonesia, as the region anticipates more US scrutiny and higher tariffs.
Trump pledged during his campaign to impose a universal 10 percent tariff for all products entering the US, as well as an additional 60 percent tariff on Chinese goods, a move that, if enacted, would send shocks through the global economy.
Foreign Ministry policy analysis and development agency head Yayat GH Ganda said Jakarta was expecting a more “unpredictable” US under Trump and expressed concerns about the political-security consequences of his victory.
“ASEAN countries, including Indonesia, may be […] pressured to choose a side […] with Trump’s policies possibly increasing China friction and risk of conflict amid a more aggressive stance on Beijing,” Yayat said.
“Of course, we are not comfortable being part of a bipolar region. We always believe in a multipolar order, [but] the region is unfortunately characterized by the ongoing bipolar rivalry between superpowers.”
Southeast Asian countries have, in the last decades, grappled with their relationship with both Beijing and Washington, with many seeking to achieve a delicate balance, with various degrees of success, as tensions in the region have continued to rise.
Trump’s victory will likely further unsettle ASEAN members, and put them in a difficult position if tensions between Washington and Beijing escalate further, experts said.
Initial indications of Trump’s cabinet, combined with the Republican Party’s dominant position in the US Congress, may lend further support to some of Indonesia’s concerns.
“The US sees the Indo-Pacific only through the lens of its competition with China. This view receives bipartisan support,” said Zsuzsa Ferenczy of the Stockholm-based Institute for Security and Development Policy (ISDP).
“I don’t see Trump wanting to shift from competition with China to cooperation,” she added.