Special Remarks Rebalancing Power through Trade: Tariffs and Strategic Competition in an Era of Economic Slowdown

Abstract

International trade is increasingly shaped by tariffs, export controls, sanctions, and strategic competition, transforming trade from a mechanism of market access into an instrument closely linked to national security, technological leadership, industrial policy, and geopolitical influence. As supply chains are reconfigured and investment decisions become more complex, Indonesia maintains that trade should remain a bridge rather than a battlefield, promoting stability, prosperity, and international cooperation amid growing global fragmentation.

Indonesia's response combines strategic flexibility, diversified partnerships, and open economic engagement. ASEAN centrality remains the foundation of regional integration, while Indonesia strengthens South–South cooperation through BRICS and continues active engagement with the OECD, G20, APEC, and the World Trade Organization. At the domestic level, competitiveness is reinforced through industrial upgrading, downstream value addition, digital transformation, and resilient supply chains to reduce excessive dependence on any single market, technology, or supply chain while preserving Indonesia's role as an open and trusted trading partner.

The presentation emphasised that multilateral economic institutions remain essential but require reform to reflect contemporary realities. Indonesia therefore supports strengthening the WTO dispute settlement system, updating trade rules for the digital economy, improving IMF governance, and expanding the World Bank's capacity to support infrastructure, climate transition, food security, and human capital development. Reform was presented as fundamental to maintaining institutional legitimacy, trust, and effective multilateral cooperation.

Growing reliance on tariffs, sanctions, export controls, and investment restrictions has increased uncertainty for economies integrated into global value chains. Indonesia therefore builds resilience by diversifying export markets and investment partners, expanding market access through trade agreements, and investing in advanced technologies, digital infrastructure, green industries, and human capital. Supported by around twenty trade agreements covering more than sixty per cent of Indonesia's international trade, this strategy also promotes business cooperation, technology and knowledge transfer, stronger people-to-people relations, and the long-term vision of Golden Indonesia 2045.

Constructive engagement remains central to Indonesia's economic diplomacy. Indonesia's experience in responding to international trade investigations, including the Section 301 process, demonstrates the importance of evidence-based dialogue, bilateral consultation, and pragmatic negotiation. A pentahelix approach involving government, business, academia, civil society, and the media was presented as essential for strengthening policy coordination, negotiating capacity, and public understanding while reinforcing Indonesia's position in international trade negotiations.

The presentation concluded that the future of international trade will be determined not only by tariffs or market access but also by trust among governments, businesses, and international institutions.  Through diversification, inclusive reform, and collaborative diplomacy, Indonesia is committed to strengthening an open, fair, predictable, and rules-based multilateral trading system.