Tariffs & Trade Conflicts: The Global Implications of U.S. Tariffs

Table of Contents

• U.S. Tariffs 
• China Tariffs 
• Canada Tariffs
• Mexico Tariffs
• EU Tariffs
• Indonesia Tariffs
• Conclusion

U.S. Tariffs 

Speaking to roughly 1,500 people in September of 2024 at FALK, a metal panel manufacturer just outside of Grand Rapids, Michigan, a then still-campaigning Trump spelled out his trade policy-to-be:

“For generations, [Michigan] was the beating heart of American industry. You gave the world General Motors, Ford, Chrysler, Dow Chemical, General Dynamic, and other giants of American industry and might… But then foolish and corrupt politicians forced Michigan workers to watch as the jobs and factories were leached from Grand Rapids, Detroit, Lansing, and Flint and sent to foreign lands far away. Not only China, China in particular, but all over. But with your vote, we’re going to reclaim America’s manufacturing power.”

Much of this language was similarly found on Trump’s campaign website, which still promises to deliver on “making America affordable again,” “making America the dominant energy producer in the world, by far!,” “stop outsourcing, and turn the U.S. into a manufacturing superpower,” and “keeping the U.S. dollar as the world’s reserve currency.”

Later in this same rally, Trump would suggest a “200 percent tariff on every car coming across the Mexican border.” While this is not yet the case, the sentiment of this rally, and many like it, has been realised in Trump’s first 100 days in office. Indeed, much of Trump’s January 20 inaugural speech was centered around his trade policy, mentioning the need for tariffs and taxes on foreign countries to enrich American citizens. Following suit, Trump announced a 25 percent tariff on Canada and Mexico beginning on February 1, less than two weeks after entering office. 

Tariffs Within North America 

Tariffs on Canada and Mexico, previously considered the U.S.’s strongest trading partners, have evolved several times between Trump’s first day in office and the end of March. Following his inaugural promise, the 25 percent tariffs were implemented on February 1 but paused on February 3 for 30 days. Nearly the same happened after those 30 days lapsed, with 25 percent tariffs applied on March 4 (reduced to 10 percent for Canadian energy specifically), followed by a 30-day pause on auto tariffs and eventually all tariffs by March 5 and 6, respectively.

However, following Trump’s March 4 announcement, Canada would retaliate with tariffs on roughly $100 billion of U.S. goods, pausing about $87 billion on March 6. By March 12, however, Trump had imposed a universal 25 percent tariff on all steel imports and has since announced a 25 percent tariff on auto imports for early April, expected to be targeted at Canada and Mexico, who have again both promised retaliation.

American Perspectives

Trump’s tariffs have had varied reactions in the U.S. In the market reaction to the tariffs, the Dow Jones Industrial Average closed at $41,583.90 on March 28, a 4.57 percent drop since January 20 in a shaky two months. 

The Nasdaq and S&P 500 are in a similar state, with the latter officially entering “correction territory” on March 13, although rising out of it days later. Some industry leaders have been openly critical of the tariffs; it has been reported that Trump’s March 5 auto tariff pause followed a call with “leaders” from Ford, General Motors, and Stellantis. Like the announced investigation into Google, there have also been concerns that other American companies could be scrutinised within the Chinese market. 

American economists have been mostly skeptical of Trump’s tariffs, arguing that the new tariffs could impact goods that made up 40 percent of all the U.S.'s imports last year, equating to roughly $1.4 trillion. 

Economists relate their concerns about tariffs’ impacts to already-high inflation and decreasing consumer spending, with increased fears of a recession. That sentiment is shared by many Americans, who fear that an already delicate post-COVID economy may not be able to withstand a trade war. A CNN/SSRS survey released on March 12 found that 61 percent of Americans and 72 percent of young adults disapprove of how Trump conducts tariffs. Notably, 59 percent of Americans without college degrees and 62 percent of Americans making less than $50,000 yearly disapprove of Trump’s tariffs. 

Many Americans believe that Trump’s strong-arm tactics against traditional allies could lend strength to American adversaries, such as Russia and China. According to an Economist/YouGov poll, the sentiment is particularly true for tariffs imposed on traditional allies, such as Canada, Mexico, and the EU. However, only some of Trump’s supporters have shared this skepticism of the tariffs: of Americans who voted for Trump in 2024, only 20 percent disagree with his tariff policies. 

Trump’s Tariffs: What’s Next?

Overall, Trump's tariffs and the retaliatory tariffs that have followed have contributed to an air of confusion and uncertainty for the future, which is reflected in the market and felt by many Americans. This has been amplified by Trump’s current track record of announcing new tariffs, often through social media, only to rescind them days later. 

As Trump’s first 100 days come to a close, concerns about increasing prices on consumer goods within the U.S. have forced legislators from both sides of the aisle to oppose Trump’s tariffs. Despite this opposition, Trump would follow through on his promise of announcing new tariffs on April 2, dubbing it “Liberation Day.” Speaking from the Rose Garden, Trump announced sweeping new tariffs, including 34 percent on China, 20 percent on the European Union, and a baseline of 10 percent on imports from all nations. 

Reacting to this announcement, the U.S. stock market opened on April 3 with massive selloffs, with the Dow dropping 1,200 points within minutes and the S&P 500 down 3.4 percent. While the aftermath of his announcement has yet to fully unfold, it is clear that the future of American trade policy under Trump is uncertain and likely to continue to evolve. 

China Tariffs

On February 4, 2025, in response to the 10 percent tariffs on all Chinese imported goods announced by the United States on  February 1, China's State Council Tariff Commission issued notice no. 1 on the imposition of additional tariffs for imported goods originating from the U.S. The new levies entered into effect on February 10.

A 10 percent tariff was imposed on eight types of goods, including crude oil, agricultural machinery, large passenger cars, pickup trucks, and other types of vehicles. Meanwhile, a 15 percent tariff was applied to eight types of energy products, including coking coal, lignite, anthracite, and liquefied natural gas (LNG). The announcement includes two relevant lists with all affected products. It is clarified that existing bonded policies, tax reductions, and other exemptions will not apply to these tariffs.

The energy trade between China and the U.S., the world's largest importer and biggest exporter of LNG, is likely to cease due to the newly imposed tariffs. China imports a small amount of crude oil and LNG from the U.S., approximately 2 percent and 5 percent, respectively. However, the tariffs will have a more significant impact on metallurgical coal, which is primarily used for steel production. In 2024, the U.S. accounted for 11.7 percent of China's total seaborne imports of metallurgical coal, making it the fourth-largest supplier after Australia, Russia, and Canada. If American metallurgical coal becomes uncompetitive in China, Chinese steelmakers may need alternative sources. Overall, these targeted countermeasures aim to provide the Chinese government with leverage ahead of future trade talks. 

On March 4, the SCTC issued notice no. 2 of 2025, imposing additional tariffs in response to an increase of the previous 10 percent of U.S. tariffs to 20 percent on all Chinese imported goods. The new retaliatory measures targeted U.S. agricultural products and took effect on March 10. 

A 10 percent tariff was imposed on 711 types of goods, such as sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products. A 15 percent tariff was applied to 29 types of goods, including chicken, wheat, corn, and cotton. Existing tax reductions and other exemption policies will not apply. Goods that were shipped from the U.S. before March 10 and are to be imported to China before April 12 will not be affected. 

With China being the largest market for U.S. agricultural products, these tariffs will cause a significant drop in prices that will hurt U.S. farmers, as domestic demand won’t compensate for the decline in Chinese demand, forcing them to seek new markets.

In addition to the above, China filed a lawsuit with the World Trade Organization (WTO) against the U.S. tariffs.

Non-Tariff Countermeasures

In addition to tariffs, China announced a series of non-tariff measures that warrant scrutiny in the context of prevailing tensions, as they are employed by Beijing to exert further pressure upon the U.S. These measures peaked on March 4.

First, on  February 4, the Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) published notice no. 10 to immediately restrict the exports of five metals, namely tungsten, tellurium, bismuth, molybdenum, and indium, and relevant products and technologies. These critical minerals are used in defence, renewable energy, electronics, and manufacturing.  

On the same day, the Security and Regulatory Bureau of MOFCOM, with notice no. 4, added PVH Group and Illumina Inc. to the Unreliable Entity List. The latter allows China to sanction foreign entities that threaten its national interests or harm the rights of Chinese entities or individuals. Finally, the State Administration for Market Regulation (SAMR) announced it had initiated an investigation of Google on suspicion of violating China’s Anti-Monopoly Law.

On March 4, MOFCOM published notice no. 13, adding 15 U.S. entities to the export control list for dual-use items. On the same day, with notice no. 5, the Security and Regulatory Bureau of MOFCOM added 10 more U.S. entities to the Unreliable Entity List due to arms sales or military technology cooperation with Taiwan. Imports, exports, and investments from these enterprises are prohibited. With notice no. 6, imports of DNA sequencers by Illumina Inc. were also banned. MOFCOM published notice no. 14 to initiate an anticircumvention investigation into cut-off shifted single-mode optical fibre products imported from the U.S. The investigation addresses claims that U.S. exporters circumvented anti-dumping duties initially imposed in 2011. 

Finally, GAC issued notice no. 29 to ban the import of U.S. lumber, claiming phytosanitary reasons. With notice no. 30, it also suspended the licenses of three U.S. companies that exported soybeans to the country for food safety reasons.

What is the New Tariff on China?

On April 2, Trump announced an additional 34 percent tariffs on top of the existing 20 percent on all Chinese imports to the U.S., bringing the total new levies to 54 percent. China is expected to retaliate soon with detailed countermeasures targeting significant U.S. sectors, such as agriculture and machinery. China will likely expand its non-tariff countermeasures by adding more U.S. entities to its Unreliable Entity List and establishing additional barriers, such as export controls for critical products. These developments will deepen the rift between the two countries and push China to diversify its trading partners. 

Canada Tariffs

On February 1, 2025, Trump signed an executive order imposing a 25 percent tariff on imports from Canada and an additional 25 percent tariff on Canadian steel and aluminium. In the press release accompanying this announcement, the White House cited domestic fentanyl production in Canada and the reason for the tax. Trump has also expressed disapproval about the trade balance between the two countries. Two days later, he announced a one-month pause on the Canada tariff with a deadline for the suspension announced for March 4. Both tariffs took effect at 12:01 a.m. ET that day. 

Canada’s Retaliatory Tariffs

Canada’s response was immediate. That same day, they imposed a first wave of retaliatory tariffs worth $30 billion and announced their intention to impose a larger second wave worth $125 billion in the near future. The first wave was mainly directed at consumer products, including meat and fish, a wide range of alcohol products, fruit juice, coffee, appliances, cosmetics, paper products, and chemical wood pulp.

On March 13, a second wave of tariffs came into force, worth $29.8 billion. The most notable items in the proposed second wave of tariffs are steel and aluminum products, due to their role as an essential industrial input and their potential to produce knock-on external economic effects. While the Canadian government opened a public consultation on the proposal for a second wave, Trump ordered a one-month pause of the tariffs for all Canadian and Mexican goods compliant with the United States-Mexico-Canada Agreement (USMCA) on March 5. The 25 percent tariff on Canadian steel and aluminum imports remained.

On March 10, Ontario Premier Doug Ford imposed a further tariff at the provincial level. Ontario Regulation 25/25, initiated by Ford, established a $10/MWh surcharge on electricity exports from Ontario to the U.S. However, this was soon reversed as Ford sent a letter to the Independent Electricity System Operator (IESO) to set the surcharge at $0/MWh, effectively eliminating it, while emphasizing that it could be reimposed at the Minister of Energy’s discretion. This swift turnaround followed what Ford termed “constructive” discussions with U.S. Secretary of Commerce Howard Lutnick.

Trump imposed a baseline 10 percent tariff on almost all countries on April 2, 2025, but Canada and Mexico were two notable exceptions. While they have avoided this further tariff for now, the existing tariffs continue to apply, and Canada will be subject to the blanket 25 percent tariff on automobiles. The impact on Canadian industry was almost immediate, with carmaker Stellantis announcing on April 3, 2025, that production for the following two weeks be halted and that employees should not report to work unless directed otherwise.

Economic Impact

The economies of the United States and Canada are highly integrated, and the potential economic fallout from a growing trade dispute could significantly impact both countries. While Trump has criticized trade imbalances with other nations, the gap between imports and exports is much less pronounced than that of Mexico or China. 

Canada is the largest purchaser of U.S. exports and the third-largest supplier of goods. Additionally, Canada is the United States’ largest supplier of steel and aluminum. Trade between the two countries constitutes more than 70 percent of Canada’s total trade. The signing of the North American Free Trade Agreement (NAFTA) in 1994 eliminated or reduced most barriers to trade, and its successor, the United States– Mexico–Canada Agreement (USMCA), has been a consistent target of criticism from President Trump.

Canada’s largest exporting industry is oil and gas, and Canada provides roughly 60 percent of the crude oil and 100 percent of the liquefied natural gas (LNG) imported into the U.S. Again, this trade has resulted in highly integrated industries between the two countries. Canada relies on the U.S. for their refining capacity, which can handle the heavy oils produced in Canada’s oil sands. An export tariff on oil could be a powerful tool for Canada, but its inability to refine its crude oil domestically and the lack of a comprehensive logistical network to transport oil overseas suggest that it is a risky prospect. 

Political Impact

The U.S.–Canada trade conflict and Trump’s comments about making Canada the 51st state have produced a major political impact in Canada. Canadians appear to have turned on the Conservative Party leader, Pierre Poilièvre, after he was perceived to be closer to Trump. Polling suggests that the Liberal Party’s response to the conflict was well-seen by voters and, having trailed by 24 percent in polling averages in early January, the Liberal Party is now favoured to win this April’s election.

Mexico Tariffs

On  February 1, Trump signed an executive order imposing 25 percent tariffs on all goods from Mexico entering the U.S. Soon after, Mexican President Claudia Sheinbaum announced that, if the measure remained, she would enact tariffs and non-tariff retaliation against the U.S., but did not give official details on what these would be. 

On February 3, after a series of phone calls between both governments, the tariffs were delayed for one month. As part of the delay agreement, Sheinbaum committed to reinforcing the U.S. border with 10,000 National Guard members to prevent drug trafficking, particularly fentanyl. A second negotiation took place one month later after 25 percent tariffs on all Mexican importations entered into force on March 4. 

Once again, the Mexican strategy was to negotiate before imposing any retaliatory tariffs or other non-tariff measures. On March 6, after pressure from the markets and more negotiations, Trump agreed to exempt all Mexican imports covered under the United States-Mexico-Canada Agreement (USMCA) for another month.

On April 2, Trump announced that Mexico is exempt from any further retaliatory and baseline tariffs. Additionally, the tariff exemption for all Mexican imports covered under the USMCA is still maintained. However, other U.S. global trade actions, such as the 25 percent tariff on steel and aluminum and the 25 percent tariff on vehicles, pharmaceuticals, and semiconductors, still apply to the country. 

The following day, Sheinbaum defined Mexico’s position on the latest update, applauding the preferential treatment compared to other nations. She explained that the current strategy of prioritising negotiation would be maintained while expediting and further developing measures from the ‘Plan Mexico,’ a strategy aimed at boosting national economic development. These strategies will be crucial to diminish the imposed tariffs' impact on the automotive sector. 

Impacts on the Supply Chain

As of 2024, the U.S. and Mexico were each other's largest trading partners for the second consecutive year. Both countries’ economic integration has consistently grown as part of the USMCA and its predecessor, the North American Free Trade Agreement (NAFTA), signed in 1994. The Mexican automotive, mechanical, and electronics manufacturing sectors have been among the most benefited from the absence of duties and would also be the most affected if all-around tariffs were to be applied. These three sectors represent 65 percent of all Mexican exports to the U.S., which in 2024 were valued at a total of $505,851 million and represented 83 percent of all global Mexican exports. 

Tariffs would be particularly challenging for these manufacturing sectors due to their long-established and complex supply chains. These highly fragmented chains comprise layers that escalate from raw materials to parts, components, and final products. Geographical proximity and the differentials in production costs that link both economies have made this interconnectedness possible and difficult to reverse without severe consequences for both countries. 

As an example of this complexity, during one of Sheinbaum’s daily conferences, Mexican Economy Minister Marcelo Ebrard explained how a piston, a key component of reciprocating engines, crosses the border seven times when assembled. Without the proper agreements in place, manufacturers could be charged multiple tariffs for the same product, which has been one of the main concerns of the Mexican authorities during negotiations. By the same logic, other intermediate inputs, such as lime and plaster products and cattle, would be greatly affected.

Regarding the 25 percent tariffs on steel and aluminium that came into effect on March 12, Mexican experts foresee that affected products would reach 4.7 percent of Mexican exports, equivalent to more than 1.5 percent of its gross domestic product. The most affected products would include auto body parts, air conditioning parts, and motor vehicle parts. According to Ebrard, consultations with the steel, aluminum, and automotive industries have been launched to prepare for further negotiations. Likewise, the 25 percent tariffs on automobiles will have an impact on the economy, but it is expected to be moderate since 82 percent of exported cars comply with the USMCA. Accordingly, for now, only the remaining 18 percent would be exposed to the new tariffs.

Economic Relations 

In addition to the tariffs' implications on the competitiveness of regional production chains, the proposed U.S. trade actions go against the spirit of open trade and the specific provisions of the USMCA, affecting the region’s economic relations even more profoundly. From an international legal standpoint, the USMCA has several chapters restricting the imposition of tariffs between the three countries. 

For example, the treaty guarantees that products originating in the parties will receive treatment equal to that granted to national goods. Accordingly, Mexican authorities could reply to the U.S. trade actions within the USMCA’s dispute resolution mechanisms, which would launch further negotiations and investigations to try to repeal the measures. Moreover, the USMCA is scheduled to have a joint review on  July 1, 2026. Current U.S. trade actions are bringing major uncertainties to the conditions under which the agreement will be reviewed or if it will be renewed at all, as parties also have the opportunity to approve or oppose the renewal of the agreement in 2036.

EU Tariffs

Given Trump's recent announcement on the imposition of new tariffs, paving the way for a more protectionist trade policy, the European Union is now preparing its response to the imminent trade war. 

Trump’s Tariffs on the EU

On April 2, Trump imposed an additional 10 percent tariff across the board and increased levies by 20 percent for countries that have a trade surplus with the United States. 

This adds up to the already announced U.S tariffs, imposing a 25 percent tax on all steel and aluminum imports starting from March 12, 2025, along with 25 percent tariffs on all vehicle imports coming into effect on April 2. Reciprocal tariffs on all incoming goods have been proposed as well, jeopardising exports of many EU countries, notably Germany and France, due to the increased tariffs. This move directly impacts industrial-grade steel and aluminum, as well as various derivative products, potentially affecting up to €26 billion worth of EU exports to the U.S, according to the European Commission. Moreover, the import tax on all vehicles imported into the country will most likely pose a significant challenge for car manufacturers across the EU. Trump recently also announced an additional 25 percent tax on automotive parts to start in May.

For context, both the U.S. and EU are members of the WTO. Therefore, members are only authorised to impose customs duties in response to discriminatory practices that do not comply with WTO rules. WTO rules prohibit the imposition of customs duties between countries, as such duties are considered to violate the free movement of goods. The U.S. must demonstrate that European practices impede imports to prevent unilateral measures that may face challenges from the WTO. 

The administration argues that the current trade dynamics with the EU favour the latter and seeks to enforce the principle of reciprocity by applying similar customs duties on American goods as the EU imposes on U.S. products in the European market. The potential application of new U.S. tariffs on EU imports, considering two major tariff barriers — customs duties and varying value-added tax rates across EU member states — presents challenges in accurately calculating the precise impact on European trade. 

EU’s Response

The European Commission has strongly opposed the U.S. administration's protectionist stance, emphasising the need to defend European businesses, workers, and consumers against unjust trade barriers. Many European leaders have expressed disapproval of the latest developments of April 2. European Commission President Ursula von der Leyen has stated that they are preparing for further countermeasures to protect their interests and businesses. The EU intends to retaliate with "proportionate" customs duties on American products. While the EU remains open to dialogues and negotiations with the U.S. to find an amicable solution, implementing new tariffs on American goods is underway unless a resolution is reached.

Nevertheless, the EU has postponed tariffs on U.S. goods until mid-April, allowing for additional diplomatic negotiations and potential peaceful resolutions amid increasing trade tensions. EU Member States may opt to implement retaliatory levies on U.S. imports in response to the aggressive stance taken by the Trump administration. 

However, it is important to note that such measures could escalate tensions further. For example, Trump has threatened to impose 200 percent duties on European alcohol products due to an ongoing dispute over steel and aluminum tariffs. France has expressed concerns about targeting American products such as bourbon and jeans, fearing potential retaliatory actions from the U.S. that could impact their lucrative wine and champagne exports. The side effects of Trump’s recent measures are still being assessed, but European stock markets have already closed lower on Thursday in response. Thus, it is likely that the EU will retaliate soon.

Indonesia Tariffs

The Trump administration's return to the United States of America signifies an embrace of protectionist trade policies, serving as a case study in the application of economic nationalism. By advocating for tariffs and trade barriers, the administration aims to prioritise the immediate protection of its domestic industries over the long-term benefits of global economic integration. 

Indonesia's Trade Relationship with the U.S.

This approach, reminiscent of reciprocal tariff wars before the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, presents a compelling contrast to contemporary economic theories that champion mutual gains from free trade. Indonesia, as the United States' largest trade partner in Southeast Asia, has been at the receiving end of these policies, both directly and indirectly. 

In 2024, Indonesia maintained a substantial trade surplus with the United States, valued at $16.84 billion. This surplus was driven by $28.08 billion worth of exports to the U.S., which included products such as palm oil, electronic components, machinery, textiles, footwear, tires, and rubber. Despite this favorable trade balance, Indonesia has lacked a bilateral free-trade agreement (FTA) with the U.S, leaving its goods vulnerable to tariff hikes. Without an FTA, Indonesian exports were always at a competitive disadvantage compared to countries with established trade agreements that are more shielded from tariffs. 

Impact of U.S. Tariffs on Indonesian Exports

​On April 2, 2025, Trump subjected Indonesia to 32 percent blanket tariffs on all its exports to the U.S., effective from April 9, 2025. This rate includes the universal 10 percent tariff plus an additional 22 percent specific to Indonesia. The U.S. administration cites Indonesia's higher tariffs on certain U.S. products, such as a 30 percent tariff on ethanol imports compared to the U.S.’s 2.5 percent tariff on the same commodity, as justification for the elevated rate. The newly imposed tariffs will affect a wide range of industries, including textiles, footwear, electronics, automotive, and agricultural products. Indonesia’s top exports—electronics, automotive, textiles, footwear, and agriculture—are under strain from the new 32 percent U.S. tariff. 

Electronics and auto exports, worth $3.46 billion and $280.4 million, respectively, grew 11 percent annually but now face rising costs and limited redirection options. The textile sector, employing 3.7 million, saw exports drop to $8 billion amid U.S. price hikes and regional competition, with Sritex’s $1.6B collapse illustrating the fallout. Footwear exports to the U.S. hit $1.92 billion in 2023; Nike, sourcing 27 percent from Indonesia, saw an 11 percent stock drop, raising relocation concerns. Agriculture exports worth $4.25 billion — mainly rubber, palm oil, and coffee — may lose ground to un-tariffed rivals.

Overall, the heightened tariffs are likely to increase retail prices in the U.S. and lead to currency volatility and economic slowdowns. Moreover, since Trump took office, the anticipation of tariffs has also contributed to currency volatility. The Indonesian rupiah has experienced fluctuations influenced by global geopolitical tensions and investor sentiment. For instance, the rupiah hit its lowest level against the US dollar since the 1998 Asian Financial Crisis on March 28, 2025, tumbling 0.5 percent to touch 16,640 IDR. This volatility can create uncertainty for Indonesian businesses, affecting their ability to plan and invest.

Historically, protectionist policies of this magnitude have triggered economic slowdowns, discouraged business investments, and burdened consumers with higher prices. The World Bank forecasts that such measures could shave 0.5 percent off global GDP growth and shrink international trade volumes by 2.1 percent, accompanied by a noticeable decline in foreign direct investment into emerging markets. For nations like Indonesia, these developments pose a double-edged challenge—directly via financial vulnerabilities and indirectly through disruptions in international trade. 

Indonesia’s Response: Industrial Development and Investment Strategies

The Indonesian government has yet to release a statement on the current tariff updates, but when tariffs were announced on aluminium and steel in March, it prompted Indonesia to reassess its long-term economic strategy. One key area of focus is the development of downstream industries to add value to raw materials before export. This approach can help Indonesia become less reliant on exporting raw materials and more competitive globally. For example, Indonesia is increasingly encouraging industrial downstreaming to increase added value before export.

Additionally, Indonesia is positioning itself as an alternative manufacturing hub within the "China Plus One" strategy. This involves attracting foreign direct investment (FDI) from companies seeking to diversify their supply chains beyond China. Indonesia's competitive labor costs, large domestic market, and strategic location within ASEAN make it an attractive destination for manufacturing investments. However, challenges remain. Infrastructure and regulatory reforms are necessary to fully capitalise on these opportunities. Moreover, Indonesia must balance its industrial development goals with environmental sustainability, as seen in the case of its nickel industry.

Conclusion

The impact of Trump's tariffs illustrates the extensive repercussions that policies can have on global trade relationships and domestic economies. Aggressive U.S. tariff measures prompted widespread international retaliation in a brief time, and further responses are expected in light of new tariffs announced on April 2. Across various economic sectors, the disruption of supply chains, potential recessionary threats, and substantial market uncertainty have become evident consequences. 

As organisations face global trade conflicts and economic uncertainty, access to timely and actionable intelligence is essential. PolicyNote+ plays a crucial role by providing detailed analyses, specialised datasets, and expert insights designed to navigate these complex global policy environments. With tailored tools and analysis from experts, stakeholders can track tariff-related developments and government responses across more than 100 countries, ensuring strategic preparedness.

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