Trump Tariff Delay Sparks Uncertainty, Markets Could Be More Volatile

JAKARTA, KOMPAS – The decision by United States President Donald Trump to temporarily delay the imposition of certain import tariffs has shifted the direction of global financial market dynamics. Stock markets and currencies in several countries, which had previously been under pressure, have now rebounded, including the rupiah. Moving forward, market volatility is expected to remain high.

Quoting Reuters news agency, Trump announced the postponement of some import tariff impositions for the next 90 days on Wednesday afternoon (9/4/2025) Washington DC time or early Thursday morning Western Indonesian Time (WIB). Nevertheless, the U.S. government will still impose tariffs on China, even increasing them from 104 percent to 125 percent.

U.S. Treasury Secretary Scott Bessent emphasized that tariff policies were initially implemented to bring countries to the negotiating table. However, Trump observed the market's tendency to panic, prompting him to reconsider his decision and delay the tariffs.

Previously, Trump's tariffs had triggered days of sell-offs in global stock markets, putting pressure on U.S. government bonds (US Treasury) and the U.S. dollar. However, last-minute changes to the implementation of the policy caused global stock markets to rebound.

The U.S. stock indices surged, with the benchmark S&P 500 index closing up by 9.52 percent and the Nasdaq rising by 12.16 percent. Asian stock markets also opened higher, such as Japan's Nikkei 225 index, which jumped nearly 9 percent, and the Composite Stock Price Index (IHSG), which gained 5 percent.

Analysts say that the sudden surge in stock prices may not return to previous levels. A survey by Reuters and Ipsos found that three out of four Americans expect prices to rise in the coming months.

Financial market volatility is certain. Financial markets are sensitive when there is uncertainty and there is definitely volatility in the financial markets.

On the other hand, Goldman Sachs reduced the likelihood of a recession from 65 percent to 45 percent following Trump's announcement of tariff delays. However, the tariff policies that remain in effect are still likely to result in a 15 percent increase in overall tariff levels.

Citing the Associated Press (AP), the Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, warned that escalating tensions could reduce US-China goods trade by up to 80 percent and worsen global economic prospects.

"Of particular concern is the potential fragmentation of global trade along geopolitical lines. A global economy divided into two blocs could lead to a long-term decline in global real GDP (gross domestic product) of almost 7 percent," he said.

Meanwhile, the US dollar index against major global currencies (DXY) is still in the range of 102 levels or has weakened by 5.38 percent on a year-to-date basis. As a result, several developing countries' exchange rates have strengthened, including the Philippine peso, Korean won, Thai baht, Malaysian ringgit, and rupiah.

Citing Bloomberg data, after Trump's tariff delay, the rupiah exchange rate on April 10, 2025 trading opened at Rp16,832 per US dollar or strengthened by 0.23 percent compared to the previous market close. The rupiah had moved to touch Rp16,735 per US dollar.

This uncertainty will continue to exist as long as Trump is in power and seems to be Trump's game.

Professor of the Faculty of Economics and Business, University of Indonesia, Telisa Aulia Falianty, said that US policies have indeed depressed the market and at the same time made the market excited again. This means that Trump has created the conditions that are most disliked by business people, with the 'game' of uncertainty.

"Financial market volatility is certain. Financial markets are sensitive when there is uncertainty and there will definitely be volatility in the financial market. The rise and fall of financial markets, such as stocks, exchange rates, bonds, all depend on the certainty or uncertainty of the global economy, politics, geopolitics," he said when contacted from Jakarta.

With Trump's announcement of a tariff delay, he said, market players likely see hope for the Indonesian economy. Likewise, if the tariff policy is still enforced, the market will react negatively again.

However, it is also important to note how much stakeholders respond to market volatility compared to other countries. Although all countries experience similar conditions, domestic financial markets tend to experience quite deep pressure.

According to Telisa, market volatility is inevitable for many countries. It just depends on how the government and financial authorities respond to the volatility, so that at least the shock felt by the community is not too big, aka it can be reduced.

"This uncertainty will continue to exist as long as Trump is in power and seems to be Trump's game. Indeed, creating uncertainty to gain profit. Therefore, strengthening our monetary fiscal fundamentals and financial sector needs to be strengthened," he said.