”Sense of Crisis”

The world is not in a good state. Especially after President Donald Trump was inaugurated for the second time to hold the highest leadership position in the United States (US). Geopolitics and geoeconomics are increasingly faced with uncertainty.

On the 74th day as the number one figure in the White House, President Trump established a controversial policy that caused panic worldwide. He decided to impose retaliatory tariffs on all countries deemed to be economically benefiting from the U.S. through trade policies considered unfair.

All countries immediately gave a regretful response, because it would trigger a trade war and disrupt the world trade supply chain. However, President Trump has not budged to apply universal tariffs of 10 percent to all countries starting April 5 and reciprocal tariffs ranging from 10 percent to 49 percent starting April 9.

Indonesia, without exception, is subjected to retaliatory tariffs because, according to the United States Trade Representative (USTR), it achieved a trade surplus of 17.9 billion US dollars in 2024. The additional tariffs imposed on products originating from Indonesia are set at 32 percent.

Chinese, Japanese and European Union officials immediately issued responses to the unilateral policy.

They urged President Trump to postpone the implementation of the policy and invited him to sit together to find the best solution to avoid a trade war.

All countries are undertaking mitigation efforts because the long-term impacts will be very severe. Stock trading in Asian and European markets was immediately under pressure after President Trump issued a policy he referred to as the "Day of Liberation."

President Trump believes that providing protection to US industries will “Make America Great Again” (MAGA). However, President Ronald Reagan, known as one of the greatest US presidents, opposed such views and policies.

He said, protectionism policy is only a temporary cure and will then bring the US economy to a standstill, because the industry is not encouraged to be efficient and innovative. Setting high import tariffs will create a moral hazard because US entrepreneurs will feel lulled by protection.

All countries immediately held an emergency meeting to respond to the US trade policies.

Leaders are indeed tested not in "moonlit" conditions, but rather when facing a crisis. The calmness and maturity of a leader are seen not when faced with a choice, between good and bad, but between bad and less bad, evil and less evil.

As in facing a war or disaster, when a crisis arises, all activities must be focused on addressing the crisis. Even during holidays, the holidays automatically become void, and everyone must immediately assume their positions in accordance with their responsibilities.

Commander call must be taken because the situation cannot wait until the holiday season is over. There are more important things to be addressed immediately, namely the fate of the country's industry, trade, and economy, because it affects the lives of many people.

Let us observe that President Trump's policies not only affect international trade but also the capital market and the money market.

Since the US is the beneficiary of the policy, the Dow Jones index is bullish, while capital markets in other regions are bearish. The value of the dollar is also strengthening because everyone thinks the US economy will improve.

All countries must now consider where the output of their industries will be sent, as President Trump's policy has been directly implemented. We know that industries across various parts of the world already have contracts, and they cannot suddenly stop or reduce production.

The supply of raw materials is not only already in place, but some are on their way to the ordering party. If not processed immediately, the raw materials need a place to store them so they don't get damaged.

Meanwhile, industries are no longer accustomed to storing raw materials because they generally implement just in time inventory to reduce costs.

Likewise with production results. All production results are usually sent directly to the ordering country to avoid sunk costs. With the adjustment of import duties to the US, both exporters and importers must recalculate their transactions.

It is now natural for the industry to face uncertainty because there is a chain that suddenly changes and requires clarity. You can imagine how chaotic the global supply chain is that is happening all over the world right now.

With a trade balance of US$38.3 billion and a surplus of US$17.9 billion, America is an important market for Indonesia. The US market is even more important than the Chinese market because even though the volume of the Chinese market is larger, Indonesia's trade balance with China is more in deficit.

For that reason, Indonesia needs to respond well to President Trump's latest policy. Even as Malaysia did, it would not be wrong if the National Geoeconomic Command Center was immediately formed so that comprehensive steps can be determined to mitigate this problem so that its impact on industry and the economy can be minimized.

The 32 percent retaliatory tariff imposed on Indonesian products is not small. It could amount to 15 billion US dollars or around Rp245 trillion. It is clear that the national industry will not be able to bear such additional import duties.

Due to the importance of the US market for Indonesia, what is needed is negotiation. There must be a high-ranking Indonesian official who is directly assigned to meet with the US Trade Representative (USTR) and the US Department of Commerce.

Domestically, we must immediately call associations and entrepreneurs who have businesses in the US. We must have complete data on the number of industries, workforce, types of products, and the value of transactions they have made so far. The data is important to know how much additional import duties must be paid if negotiations with the USTR and the US Department of Commerce fail to achieve satisfactory results.

The government and the business world must be willing to share the task and also share the burden to save business with the US. We cannot immediately stop trading with partners in the US because finding a replacement market outside the US is not easy.

The National Geoeconomic Command Center must take a broader view, both in formulating short-term and long-term policies.

We must dare to help entrepreneurs and industries to survive, because leaving them to struggle alone will make them helpless. If many domestic industries collapse, many employees will lose their jobs.

All countries will certainly fight to save their industries and the lives of their people. Because that is where the government's job is, namely to protect the lives of its citizens.

We will be able to get through this difficult time if we then want to hone our sense of crisis. The ten-day Eid holiday is allowed if the situation is normal.

Now the situation is truly a crisis because we are facing a perfect storm. It is time to call all parties to immediately return to work and bring Indonesia through this great storm.

We must not be like ostriches that just bury their heads in the sand when there is a problem. We must not be calm and when the market reopens on April 8, the conditions are already in decline. Hopefully not!

SuryopratomoAmbassador of the Republic of Indonesia to Singapore