Economists Say Trump's Tariff Delay Offers Market Relief, But Global Slowdown Risks Remain

April 15, 2025 | 05:50 pm

TEMPO.CO, Jakarta - PT Bank Mandiri's Office of the Chief Economist noted that U.S. President Donald Trump's decision to delay new import tariffs could help ease market volatility, although the risk of an economic slowdown has grown.

On April 9, 2025, Trump announced a 90-day postponement of additional tariffs on most countries.

“The delay in tariffs offers temporary relief to the markets, but uncertainty continues to loom,” Bank Mandiri stated in its Daily Economic and Market Review, as quoted on Tuesday, April 15, 2025.

Federal Reserve Chair Jerome Powell noted that additional import tariffs could lead to a rise in consumer goods prices in the near term. However, he emphasized that future monetary policy decisions will still hinge on forthcoming inflation and economic growth data.

Bank Mandiri observed that markets are increasingly factoring in the heightened risk of a global economic slowdown. This sentiment stems from persistent trade tensions and their potential effects on international trade and investment flows.

These concerns are also evident in the decline of the U.S. dollar index (DXY), which slipped below the 100 mark to 99.6, signaling a shift in investor preference toward safer assets like gold.

"Ongoing global uncertainty could dampen Indonesia’s export outlook and strain foreign capital inflows," Bank Mandiri warned.

In this condition, the room for Bank Indonesia to implement future monetary policy easing will depend on external stability and domestic economic resilience. In addition, the active role of the Indonesian government in pushing for negotiations and reaching trade agreements will be crucial, especially after the 90-day tariff delay period ends. According to Bank Mandiri, this step is to mitigate negative impacts on trade and investment.

"We expect domestic financial market volatility to remain high in the coming weeks as the market observes tariff negotiation outcomes and the direction of global economic growth," said Bank Mandiri.

Yesterday's IHSG Closed Positively, Effects of Trump's Tariff Delay

The Composite Stock Price Index (IHSG) closed up by 1.92 percent or 120.244 points to 6,382.4 on Monday, April 14, 2025.

Analyst from Samuel Sekuritas Indonesia, Muhammad Alfatih, said the strengthening of the IHSG occurred because market sentiment improved after Trump delayed the tariff policy.

"Global market sentiment improved after Trump delayed the tariff policy," he said when contacted on Monday, April 14, 2025.

According to him, the strengthening of the IHSG was also driven by stocks with large weights that partly strengthened on that trading day. In addition, some banking issuers were also distributing dividends with high yields.

"Some large banks are distributing dividends with high yields," said Alfatih.

According to him, the strengthening of the IHSG last week also provided a positive boost. At the beginning of this week, the IHSG's strengthening also ended the negative trend since January 2025.

"And the early-week increase ended the downward channel since January 25, as long as it is able to stay above 6,280," he said.

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