Deep Dive on Indonesia Export to USA

When President Donald Trump declared import tariffs on all nations across the world,
everyone is wondering what the implications are for international trade. To begin, it is
useful to look at the number of trade balances from and to the United States that
triggered President Trump’s calculations. Although the United States has a trade
surplus in services, it has had a trade deficit in total over the previous ten years (though
this may vary by country). Figure 1 depicts the data, with the top left figures
representing the overall numbers.

From the data, China, Mexico, and Canada are the leading exporters and importers to
the United States. Because of their proximity and NAFTA accords, it seems sense to
place Mexico and Canada in the top ranks. The data demonstrate China’s prominent
position in relation to the United States. In terms of product categories, we can see
that imported goods are primarily industrial products, demonstrating USA
disadvantages even in product areas with sophisticated production requirements.

The consequences will undoubtedly also affect Indonesia, even if the USA most likely
targeted trade imbalances towards large countries like the EU, China, or its
neighbours. So, it is worthwhile to deep dive where we are going to be hurt badly.
Using data from https://comtradeplus.un.org, we are able to do a preliminary data
analysis on USA Import from Indonesia, as shown on Figure 2. The top part of Figure
2 shows the 10 years aggregate data by HSCode level 2. From this visual, we can see
the top 6 sectors that are going to be impacted are : Electrical Machinery & Equipment
; Apparel & Clothing ; Footware ; Ribber ; Furniture and Fisheries

According to the bottom portion of Figure 2, which shows the patterns for these six
industries over the last ten years, electrical machinery is on the rise and has recovered
rapidly from the pandemic. The remaining five sectors are only now beginning to return
to their pre-pandemic state.

What we must be concerned about is some of these sectors are labour incentives (e.g.
apparel and shoes) and impact the people at the bottom of the pyramid (farmers,
fishermen). Having a mitigation strategy on how to divert Indonesia export to other
countries is therefore crucial. A thorough analysis on the impact on the changed global
supply chain for these product categories to different market is also important.