The Indonesia Stock Exchange (IDX) Composite index plummeted more than 9% during early trading on Tuesday, as the rupiah fell to an all-time low against the U.S. dollar. This dramatic decline comes after a weeklong closure of the market due to religious holidays, including Eid and a Hindu holy day. The market turbulence follows the announcement of significant new tariffs by U.S. President Donald Trump last Thursday.
These tougher-than-expected levies on trade partners have heightened fears over their impact on global trade dynamics. As trading resumed, investors in Jakarta reacted sharply, anxious over the potential economic fallout of the new U.S. tariff policy. The IDX Composite index saw a sharp decline, shedding 9.6% at one point during morning trade.
The rupiah also hit an unprecedented low, reflecting broader concerns about the Indonesian economy’s vulnerability to international trade tensions.
U.S. tariffs impact Indonesian trade
Tuesday marked the first trading day after the holidays, opening the market to a volatile beginning.
The U.S. tariffs are expected to particularly impact low-cost manufacturers in Southeast Asia, several of which are based in Indonesia. Despite these concerns, Indonesian officials have stated that the country will not retaliate against the U.S. tariffs. Market reactions have been mixed across the region.
While Indonesia experienced significant losses, Japan’s Nikkei index jumped 6%, showing signs of market recovery optimism. The S&P 500 in the U.S. faced a different trajectory, experiencing a decline as uncertainty over the trade policy persisted. The unfolding trade war implications continue to cast a shadow over global markets, affecting investor sentiment and economic stability worldwide.
