The Global Trade Map Is Changing

The global trade map is beginning to shift. The main triggers are geopolitical conflicts and intensifying trade wars. Meanwhile, Indonesia's trade performance still relies heavily on traditional export markets, particularly China and the United States.

On March 14, 2025, the United Nations Office for Trade and Development (UNCTAD) released its March 2025 Global Trade Update report. In the report, UNCTAD stated that global business, including trade, is starting to move beyond trade restrictions to geopolitical allies (friendshoring) or nearby regions (nearshoring).

Instead of consolidating supply chains, companies in several countries are attempting to diversify trade networks to mitigate risks. This has, in fact, led to supply chains becoming more diversified rather than consolidated.

“While these steps create opportunities, they also add complexity to trade,” UNCTAD said in the report.

UNCTAD also stated that the trade policies of several countries are beginning to redraw the global trade map. These trade policies include, among others, protectionism through the increase and expansion of tariffs, as well as subsidies and protection for domestic industries.

The trade policies of a number of countries are beginning to redraw the global trade map.

The United States and the European Union are increasingly aligning their trade measures with tariffs, economic security, and goals to address climate change. Meanwhile, China is utilizing stimulus policies to maintain the momentum of its export performance.

The dependence on international trade is shifting. The United States, Russia, Vietnam, and India, for instance, have deepened their trade relations with specific partners. Meanwhile, Australia and the European Union have reduced their reliance on traditional markets.

UNCTAD noted that over the past year, 2023-2024, Russia's trade dependence on China and India increased by 1.2 percent and 1.8 percent, respectively. Meanwhile, Russia's trade dependence on the EU decreased by 3 percent, and the EU's trade dependence on China dropped by 0.1 percent.

The dependence of U.S. trade with China and Canada on the U.S. also decreased by 0.3 percent and 1 percent, respectively. Meanwhile, the dependence of U.S. trade with the EU decreased by 0.2 percent.

The restructuring of policies in several countries has contributed to uncertainty. The rise of protectionism (policies that favor domestic industries through tariffs or restrictions), particularly in developed countries, has triggered retaliatory actions from trade partners and increased trade barriers.

In fact, in 2024, the trade war between the US and several countries in the region has not yet become too acute. However, in the early months of 2025, the current of the trade tariff war is getting stronger, even to the point of being brought to the World Trade Organization (WTO).

The WTO noted that on March 13, 2025, Canada filed a trade dispute lawsuit over the increase in steel and aluminum import duties into the US market. China also filed a request for trade dispute consultations over the imposition of additional tariffs on goods imposed by the US.

Therefore, both UNCTAD and WTO urge countries in the world to create balanced and fair trade policies. Both world institutions also emphasize the importance of each country developing multilateral cooperation.

Meanwhile, amid the trade war that has begun to change the global trade map, Indonesia is still recording a trade balance surplus. The trade balance also shows that Indonesia's dependence on China and the US is still large.

The Central Statistics Agency (BPS), Monday (17/3/2025), released that Indonesia's goods trade balance in January-February 2025 had a surplus of 6.61 billion US dollars. Compared to the same period in 2024, the trade surplus increased by 3.78 billion US dollars.

BPS Head Amalia Adininggar Widyasanti said that the largest trade balance surplus in the period was contributed by the US, which was 3.13 billion US dollars. Export commodities that contributed greatly to the surplus were electrical machinery and equipment and their parts, clothing and accessories, and footwear.

Meanwhile, with China, Indonesia experienced a trade deficit of 3.53 billion US dollars. A number of dominant import commodities that triggered the deficit were machinery and mechanical equipment and its parts, electrical machinery and equipment and its parts, and vehicles and its parts.

"Even so, Indonesia's trade balance with ASEAN countries, the EU, and other countries in January-February 2025 had a surplus of 1.68 billion US dollars, 1.96 billion US dollars, and 7.89 billion US dollars, respectively," he said.

BPS also noted that Indonesia's trade balance in February 2025 had a surplus of 4.48 billion US dollars or an increase of 2.28 percent annually. Thus, Indonesia has recorded a trade surplus for 58 consecutive months since May 2020.

During a visit to Kompas on March 6, 2025, Minister of Trade Budi Santoso stated that Indonesia will not adopt a protectionist path because it can backfire on Indonesia's export performance. As much as possible, Indonesia will not prevent products from other countries from entering the Indonesian market.

"However, we will continue to monitor and measure the products that will enter according to domestic needs," he said.

In addition, Budi continued, Indonesia will also mitigate the impact of the ongoing trade war. First, the Ministry of Trade (Kemendag) will strengthen non-traditional export markets such as the Middle East, Africa, Latin America, and South Asia.

Second, the Ministry of Trade is also working with ministries/institutions and industry players to stem the potential for a "flood" of imports. One of the efforts made is to impose anti-dumping duties (BMAD) on nylon products from China, Thailand, and Taiwan and safeguard duties (BMTP) on ready-made clothing.

"We also monitor and take action against a number of illegal imported goods, such as textiles and textile products, ready-made clothing, clothing accessories, ceramics, electronics, footwear and cosmetics," he said.