The US-India Trade Rift Is ASEAN’s Wake-Up Call, Indonesia Must Seize the Moment

When global giants clash, nimble nations thrive.

The United States’ decision to raise tariffs on Indian imports to 50% may seem, at first glance, like a bilateral skirmish between two economic powerhouses. But in truth, it is a tremor that shakes the tectonic plates of global trade—and opens up an unprecedented window of opportunity for Indonesia and the broader ASEAN region.

We in Southeast Asia must read these signals not with alarm, but with intent. For Indonesia, this moment is not one of caution, but of consolidation. If approached strategically, it may prove to be a generational opportunity.

Trade Tensions Create Openings

Tariff hikes force American importers to seek alternative supply chains. Indonesia already has a foothold. In 2024, bilateral goods and services trade between Indonesia and the U.S. reached $42.9 billion, with Indonesia maintaining a $17.9 billion surplus. Our key exports—textiles, electronics, palm oil, rubber, and footwear—align precisely with sectors likely to be affected by U.S.–India tariff friction.

In June 2025 alone, Indonesia’s exports to the U.S. jumped significantly, contributing to a $4.11 billion trade surplus—an encouraging signal that the redirection of trade is already beginning.

Now is the time to cement our relevance. Indonesia should offer itself as the default partner of choice for U.S. buyers seeking stability, neutrality, and price competitiveness.

Middle Powers Must Not Remain Middle Men

In an age where geopolitical realignment is no longer theoretical but visible in trade, supply chains, and investment flows, Indonesia’s strength lies in its geoeconomic positioning:

• A population of over 280 million with a growing middle class
• A strategic location straddling vital global shipping lanes
• Rich endowment in critical minerals (especially nickel, copper, and bauxite)
• A digitally transforming MSME sector
• A commitment to green transition and halal value chains

The U.S.–India rift should prompt us to enhance bilateral and regional frameworks with the U.S. and EU. We must accelerate Indonesia’s leadership within ASEAN, pushing forward the ASEAN–U.S. Trade and Investment Framework to make the region more resilient and responsive.

Three Strategic Steps for Indonesia

1. Offer an Export Bridge

Position Indonesian industries to absorb diverted U.S. demand—especially in garments, auto parts, agricultural commodities, and semiconductor inputs. Targeting supply gaps proactively through “Made in Indonesia” campaigns can capture immediate wins.

2. Attract Diverted FDI

Multinationals hedging against India’s rising trade costs may now reallocate capital. Indonesia must simplify permitting, guarantee political and legal certainty, and roll out green industrial zones that attract investment in clean tech, EVs, and pharmaceuticals.

3. Lead ASEAN’s Collective Response

As a former member of KEIN and now Vice Chair for Technology Transformation at KADIN, I believe Indonesia should spearhead a regional readiness mechanism to respond to global shocks—combining ASEAN’s strengths to act faster and bargain smarter on the global stage.

From Reaction to Relevance

The global economy is no longer a linear contest of GDP or trade volumes. It is a network game—and in this game, Indonesia and ASEAN must stop waiting for rules to be written by others.

The U.S.–India tariff escalation is not just a diplomatic headline. It is a signal flare.

It tells us that economic alliances are fluid, that middle powers matter, and that nations like Indonesia—if united, agile, and confident—can rise from the wings to shape the next global chapter.

Indonesia does not need to wait for an invitation to the global table. The seat is already ours—if we dare to claim it.