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Assessing The Impact Of The Trump 2.0 Policy And The Potential Of Indonesia’S Top Export Commodities

Author

Listed:
  • Rudy Marhastari

    (Bank Indonesia)

  • MHA Ridhwa

    (Bank Indonesia)

  • Amelia A. Hidayat

    (Bank Indonesia)

  • Shinta Fitrianti

    (Bank Indonesia)

  • Desthy V.B. Sianipar

    (Bank Indonesia)

  • Ais Nisa M.

    (Bank Indonesia)

  • Sulistiyo K. Ardiyono

    (Bank Indonesia)

  • Elpiwin Adela, M.

    (Bank Indonesia)

  • Adamul Khair

    (Bank Indonesia)

  • Anna Setyawati

    (Bank Indonesia)

Abstract

This study examines the direct and indirect impacts of the Trump 2.0 reciprocal tariff policy on Indonesia’s exports and identifies export opportunities and challenges amid rising global protectionism. Using granular HS 6-digit commodity data, the analysis maps priority export sectors most vulnerable to tariff shocks. A mixed-methods approach combines multicountry partial equilibrium and CGE-GTAP models to estimate direct effects, while Trade in Value-Added (TiVA) data capture indirect spillover effects through affected trading partners. Qualitative evidence from Focus Group Discussions and field surveys complements the quantitative analysis. The findings show that Trump 2.0 tariffs are likely to suppress Indonesia’s exports both directly and through global spillovers. However, significant opportunities remain through export diversification toward Europe, the Middle East, Canada, and Mexico, as well as through trade creation in strategic commodities such as palm oil, nickel, and rubber. The study highlights the need to accelerate downstream industrial development, strengthen strategic industrial ecosystems, and better align trade and investment policies to enhance Indonesia’s export resilience and competitiveness amid evolving geopolitical conditions.

Suggested Citation

  • Rudy Marhastari & MHA Ridhwa & Amelia A. Hidayat & Shinta Fitrianti & Desthy V.B. Sianipar & Ais Nisa M. & Sulistiyo K. Ardiyono & Elpiwin Adela, M. & Adamul Khair & Anna Setyawati, 2025. "Assessing The Impact Of The Trump 2.0 Policy And The Potential Of Indonesia’S Top Export Commodities," Working Papers WP/02/2025, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp022025
    as

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    References listed on IDEAS

    as
    1. Chad P. Bown & Meredith A. Crowley, 2013. "Self-Enforcing Trade Agreements: Evidence from Time-Varying Trade Policy," American Economic Review, American Economic Association, vol. 103(2), pages 1071-1090, April.
    2. Pauwelyn, Joost, 2025. "How the US Reciprocal Tariff Plan May Save the Global Trading System," World Trade Review, Cambridge University Press, vol. 24(4), pages 509-514, October.
    3. repec:wbk:wbpubs:37224 is not listed on IDEAS
    4. Aaditya Mattoo & Robert W Staiger, 2020. "Trade wars: What do they mean? Why are they happening now? What are the costs?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(103), pages 561-584.
    5. repec:wbk:wbpubs:36519 is not listed on IDEAS
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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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