On Friday, a senior Indonesian official introduced that the nation would impose an import tariff of as much as 200 % on a variety of Chinese language items, with the intention to shield the nation’s micro, small, and medium enterprises (MSMEs).

Chatting with reporters, Commerce Minister Zulkifli Hasan stated that the commerce battle between China and america had prevented China from offloading its oversupply on many Western nations. This has led it to redirect exports to different markets like Indonesia, threatening the nation’s smaller companies with “collapse.”

“The USA can impose a 200-percent tariff on imported ceramics or garments; we are able to do it as properly to make sure our MSMEs and industries will survive and thrive,” he stated, the Antara information company reported.

Reuters paraphrased Zulfikli by saying that the tariffs would vary between 100 and 200 % and that they “might have an effect on imports of footwear, clothes, textiles, cosmetics and ceramics.” A senior Commerce Ministry official stated that the Indonesian Commerce Safeguards Committee would decide the degrees of the tariffs and the classes of products that will be lined.

This isn’t the primary transfer aimed toward tightening management over imports. Final yr, Jakarta issued a regulation creating import quotas for tons of of merchandise, together with meals components, footwear, electronics, and chemical substances. However the authorities was then pressured to problem various revisions to the regulation, after Indonesian corporations complained that the quotas gummed up provide chains, making it exhausting for them to acquire imported supplies wanted by home business.

U.S.-based observers cited the information of the imposition of those vital tariffs on Chinese language items for instance that nations within the International South share the U.S. authorities’s issues about Chinese language overcapacity. Nonetheless, there are a variety of key variations, the obvious being that the difficulty has not been securitized in Indonesia to the extent that it has in america and different components of the democratic West. It additionally includes fundamental gadgets

On this case, it seems that Jakarta is anxious concerning the potential political blowback if a flood of Chinese language imports pushes the nation’s 64 million MSMEs to the brink of survival. The Indonesian authorities has a protracted monitor document of intervening within the financial system, via subsidies, export bans, and different measures, with the intention to shield low-income Indonesians and promote the event of native industries.

As The Diplomat’s economics columnist James Guild famous, “a key precedence for the federal government is to make sure that the value of staple items – resembling gasoline, electrical energy, rice, and cooking oil – stays steady and inexpensive.” It has sought to do that by way of various measures, together with subsidies, export restrictions, and a mechanism often known as a Home Market Obligation, underneath which producers of sure uncooked supplies (resembling coal) should present a sure proportion of manufacturing to the home market at usually below-market costs. Consistent with this, the Commerce Ministry final yr banned e-commerce transactions on social media networks, dealing a serious blow to the regional plans of the Chinese language agency TikTok.

As such, the imposition of the tariffs is unlikely to disrupt the mutually helpful points of bilateral ties between Beijing and Jakarta. China is at the moment Indonesia’s principal supply of imports, and its principal marketplace for exports, and a continued circulation of commerce and funding is a mandatory element of the Indonesian authorities’s home financial agenda. On this sense, it is smart to view the brand new tariffs as a method of adjusting the stability between home and worldwide financial priorities, moderately than as an expression of bilateral tensions.

As such, whereas Beijing is not going to be comfortable concerning the transfer, the broadly optimistic tenor of bilateral relations, in addition to the will to get off on the best foot with the incoming administration of Prabowo Subianto, means that it’s unlikely to immediate a major response.