The US-China Trade War: Spillover Effects on Indonesia and other Asian Countries

Approximately 41 percent of Indonesian exports are connected to global production networks, with the United States of America (US) and China as the two main trade partners. A network analysis is employed to trace the impact of USChina tariffs on their partners transmitted via the production networks. A 25 percent bilateral (US-China) tariff will decrease exports from China to the US twice as much as those from the US to China. Indirect exports from Indonesia may fall by US$300 million due to the US' tariffs on Chinese goods and US$36 million due to Chinese tariffs on the US' products. China has decreased the share of inputs originated from its leading input suppliers i.e., Japan and South Korea. The largest impacts of tariffs on Chinese exports to the US are computers, electronics, electrical equipment, textiles, and chemicals. Meanwhile, American goods suffering the largest effects are transportation equipment, chemicals, agricultural, and services.