The prospect of a second Trump presidency has sent ripples of concern through the Indonesian economy, with forecasts indicating a potential loss of 1.2 million Indonesian jobs due to anticipated shifts in U.S. trade policies. These job losses are projected to primarily affect sectors heavily reliant on exports to the United States, raising significant economic and social implications for Indonesia.
The primary driver of this forecast is the potential implementation of increased tariffs on Indonesian goods entering the U.S. market. Industries such as textiles, footwear, and electronics, which form a substantial portion of Indonesia’s export revenue and employment base, are particularly vulnerable. A surge in tariffs would likely render Indonesian products less competitive in the U.S., leading to a decrease in export volumes and subsequent workforce reductions.
Furthermore, the potential for a resurgence of “America First” policies under a second Trump administration could disrupt global supply chains. Indonesia’s deep integration into these networks means that any trade barriers or protectionist measures could trigger production slowdowns and job losses across various manufacturing sectors.
The forecast also considers the potential for reduced foreign direct investment (FDI) from the U.S. to Indonesia. Many Indonesian industries rely on this investment for growth, modernization, and expansion, all of which contribute to job creation. A decline in FDI would likely stifle economic development and exacerbate unemployment concerns.
Another crucial factor is the potential alteration or elimination of the U.S. Generalized System of Preferences (GSP), which provides preferential tariff treatment for specific Indonesian goods. Any changes to this program would increase the cost of Indonesian exports to the U.S., potentially leading to a sharp decline in demand and corresponding job losses.
The Indonesian government is actively assessing the potential impact of these policies and exploring strategies to mitigate the risks. Diversification of export markets and bolstering domestic industries are being considered as key measures to reduce reliance on the U.S. market. The government is also engaging in diplomatic efforts to maintain favorable trade relations.
The anticipated loss of 1.2 million Indonesian jobs underscores the significant economic consequences of potential U.S. trade policy changes.