- The US government made good on its promise to impose higher import tariffs on Canada, Mexico, and China as soon as January ended, bringing volatility back to the financial markets.
- Anticipation of higher import duties had led to a surge in US imports, fueling manufacturing expansion in consumer goods-producing economies, including Indonesia. However, this trend may prove untenable as the now-higher tariffs could indirectly impact Indonesia.
- Allowing currencies to depreciate may remain the least disruptive solution to mitigating the threat of higher US tariffs, meaning that maintaining a weaker Rupiah may be necessary to preserve domestic manufacturers’ access to the US market.