April 11, 2025
JAKARTA – Governments around the world are grappling with how to react to steep tariffs slapped by the United States on almost all imports.
China, the number one target of the measures and on the receiving end of increased US protectionism for many years, has chosen the most defiant response, vowing to “fight to the end” with retaliatory tariffs and trade restrictions.
The European Union, too, is putting on a brave face and has announced retaliatory import tariffs of 25 percent on certain US goods including motorcycles, fruit and poultry, but is still mulling over its full response and may struggle to find a common position agreeable to all members.
Canada is also playing hardball, even though many of its goods are exempted from sweeping US tariffs, for now. Ottawa has announced counter-tariffs on US-made vehicles and other goods in response to similar measures imposed by Washington.
Mexico, which like Canada is not subject to the general 10 percent US “baseline” tariff thanks to a regional trade agreement but still hit with steep levies on automotive and other specific goods, has taken a more conciliatory stance and hailed its “preferential treatment”.
Some ASEAN leaders, meanwhile, appear to be falling over backwards to appease Washington and find themselves alongside governments on various continents hurriedly dispatching delegations to the US.
Indonesia is among that group.
US President Donald Trump’s administration has sent out mixed signals about the prospects of countries swaying Washington in their favor, with some US officials rejecting offers of a zero-for-zero tariff deal but others signaling a readiness to negotiate.
Can one fault Hanoi for appearing quite willing to compromise with the US, despite an America First policy lambasted around the globe for severely damaging the global economy?
After all, Vietnam faces a particularly steep “reciprocal” tariff of 46 percent, which compares to 32 percent for Indonesia, and its export-focused economy relies on shipments to the US for about 30 percent of gross domestic product (GDP).
On the other hand, governments seeking special favors from the US play right into Washington’s divide and conquer strategy.
As sovereign countries, ASEAN capitals have the right, and duty, to act in their national interests for the benefit of their people, but does going it alone serve that purpose?
In a remarkable departure from Indonesia’s economic nationalism, President Prabowo Subianto has demanded that we import whatever it takes to eliminate our trade surplus with the US.
The President also vowed to toss out any business regulations that “don’t make sense”, taking aim at local content rules and other sticky red tape long criticized by the likes of the US Chamber of Commerce for hampering business operations, particularly for foreign investors.
The top-level public announcement made just hours before the supposedly reciprocal tariff would begin hurting our US-bound exports now has ministries scrambling to comply.
Whatever they come up with cannot but go against the grain of our protectionist instincts and will be met with pushback from domestic lobbies.
To be fair, some of those rules have probably done us more harm than good, but changing them due to external pressure under what Beijing calls Washington’s “blackmailing nature” rather than based on domestic considerations is bound to cause resentment.
Compromise is costly, which is why our response must go well beyond seeking a bilateral agreement with the US.
Our government swiftly engaged in talks with Malaysia on the issue, which is a good start. As hard as it may be, given the very different ASEAN economies, we must agree on common principles for global trade and defend those together.
Sending an ASEAN delegation to the US rather than individual governments of the region waiting in line for their audience with the Trump administration would increase our bargaining power.
Our position would be even stronger if we turned up with representatives from China, Japan, South Korea, Australia and New Zealand to present ourselves as the Regional Comprehensive Economic Partnership (RCEP), which is, after all, the biggest trade block in the world.