During a press conference here on Wednesday, Finance Minister Sri Mulyani explained that Trump's policy direction would most likely be more accelerative than his previous term in 2017-2021, with significant implications for the global economy, including Indonesia.
"Usually, in terms of the state budget, he (Trump) will be populist by cutting corporate taxes but will also cut a lot of benefits that will be enjoyed by its people, so the fiscal balance still remains to be seen," Sri Mulyani stated.
"Meanwhile, in terms of the political side regarding immigration, the conflict between Russia and other countries, as well as the US' commitment to climate change, will also change," she remarked.
Sri Mulyani highlighted that Trump's proposed high tariff policies, including the threat of 100 percent tariffs on BRICS member countries and a 60 percent tariff increase on Chinese products, can potentially increase geopolitical tensions and disrupt global supply chains.
She noted that US protectionist policies could hold back the pace of the Fed Fund Rate, causing volatility in global commodity prices.
In addition, the US financial market tends to respond to Trump's policies with an increase in the stock market, but this will be followed by an increase in the deficit and state debt.
The high yield of the US treasury due to expectations of a fiscal deficit also has an impact on capital outflows from developing countries, including Indonesia.
Hence, Sri Mulyani emphasized the importance of anticipatory steps for Indonesia amid the dynamic situations affected by Trump's policies—particularly related to the strengthening trend of the US dollar and changes in the US trade policy.
Nevertheless, the minister assessed that Indonesia has the opportunity to strengthen its position in the global economy. She believes that the best defense step for the country is to ensure food and energy security and position Indonesia as a key player in the strategic commodity supply chain.
Sri Mulyani explained that the government, under President Prabowo's direction, will prioritize strengthening domestic resilience, especially in the food and energy sectors, and utilizing strategic opportunities to improve Indonesia's position in the global arena.
"In addition to strengthening domestic food and energy (production) and its influence on various domestic policies, the challenges that we must also anticipate are, of course, our big trading and investment partners—the US and China," the minister noted.
"With the US under President Trump, from an economic perspective, it is bullish, with implications of its policies. The second-largest economy, China, also has an impact that we must continue to monitor and be aware of and the impact of the relationship between China and the US has an impact on the entire world," she added.
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Translator: Bayu Saputra, Yashinta Difa
Editor: Rahmad Nasution
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