Indonesia to impose 200% tariff on goods from China to counter dumping – will this affect the auto industry?

Indonesia to impose 200% tariff on goods from China to counter dumping – will this affect the auto industry?

A brave move that few saw coming. We’re not talking about AUKUS or Europe, but an ASEAN country ‘standing up’ to our region’s superpower and biggest trade partner – China. Over the weekend, news surfaced from Indonesia saying that the country will soon impose import tariff of up to 200% on Chinese goods.

Should it happen, the move will immediately increase the cost of Chinese imports, and by some margin too. According to state news agency Antara, Indonesia’s trade minister Zulkifli Hasan said the planned tariff is to mitigate the effects of the trade war between China and the United States.

How so? He explained that the ongoing trade war between China and the West is causing an oversupply situation in the Asian giant – as their products face rejection by Western countries, it forces them to redirect exports to other markets like Indonesia. The minister didn’t use the word, but this practice is called dumping.

Indonesia to impose 200% tariff on goods from China to counter dumping – will this affect the auto industry?

Acording to Investopedia, dumping is when a country (in this case, China) exports a product at a price that is lower in the foreign importing market (Indonesia) than the price in the exporter’s domestic market. Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product’s manufacturer or producer in the importing nation (again, Indonesia).

In other words, very few can compete with China’s scale and low cost, and when the giant dumps its products on us, the products of local manufacturers will be rendered uncompetitive by the influx. Consumers typically don’t mind cheaper goods, but as local businesses suffer, the effects will eventually be felt by the man on the street.

“The United States can impose a 200% tariff on imported ceramics or clothes; we can do it as well to ensure our MSMEs (micro, small and medium enterprises) and industries will survive and thrive,” Zulkifli said, adding that the tariff for China goods will range from 100 to 200% and the policy will take effect once the regulation is passed.

Indonesia to impose 200% tariff on goods from China to counter dumping – will this affect the auto industry?

While the Antara piece did not specify the type of good that will be targeted, Nikkei Asia mentioned shoes, clothes, textiles, cosmetics, and ceramics. Cars and auto parts aren’t in the list, for now at least, but as the number of Chinese cars and brands grow (and cars are highly visible things), would the republic’s leaders put a brake on the growth via tariffs on CBU imports?

Interestingly, while researching this topic, I stumbled on a January 2024 article from China’s Belt and Road portal, which highlights the Middle Kingdom’s investments and inroads across the globe. Titled ‘RCEP boosts trade cooperation between China, Indonesia’, it cited the success of a company that manufactures coated ivory boards.

“With the certificates of origin under the Regional Comprehensive Economic Partnership (RCEP), our goods will enjoy a tariff reduction of nearly 20,000 yuan (RM12,977) when clearing customs in Indonesia,” said Liu Ning, director of the company’s export customs affairs. The batch of goods were valued at 430,000 yuan (RM278,994).

Indonesia to impose 200% tariff on goods from China to counter dumping – will this affect the auto industry?

The RCEP entered into force on January 1, 2022, and it comprises 15 Asia Pacific countries including 10 ASEAN members and their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.

RCEP took effect in Indonesia at the start of 2023, when the republic implemented immediate zero tariffs on 65.1% of products originating from China. The same gesture (67.9%) applies the other way, but China exports way more to Indonesia than the other way round. China has been Indonesia’s largest trading partner for 10 consecutive years now.

Based on the China-ASEAN Free Trade Agreement (CAFTA), Indonesia will add zero-tariff treatment to more than 700 Chinese products, including auto parts, motorcycles, televisions, clothing, shoes and plastic products, the Belt and Road article added.

So, we’re witnessing a swift turnaround then, perhaps due to pressure from local manufacturers feeling the pinch. While this piece of news is about China-Indonesia trade, the same benefits and complications apply to other ASEAN countries too, including Malaysia. There’s a price war in China’s auto market now, and when they need to look outward, the nearest and most obvious target is Southeast Asia.

Looking to sell your car? Sell it with Carro.

10% discount when you renew your car insurance

Compare prices between different insurer providers and use the promo code 'PAULTAN10' when you make your payment to save the most on your car insurance renewal compared to other competing services.

Car Insurance

Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • Pusat kitar semula ah chong on Jul 01, 2024 at 4:04 pm

    We welcome tofu dreg Chinese EVs into Maresya. Lai Lai please dump it here. Good for my scrap metal business

    Like or Dislike: Thumb up 2 Thumb down 1
  • Smart move Indonesia.

    Don’t need to worry about offending the middle kingdom. They are losing friends faster than they can make. They can’t afford to lose more friends over small matter.

    It’s a win-win-win cooperation with shared future & prosperity. Mountain, flower and sea. Friendship, peaceful and harmony.

    Like or Dislike: Thumb up 2 Thumb down 1
  • Well, Indonesia has to protect foreign auto investors in their nation (example, Hyundai) as they have a manufacturing plant there, especially their battery plant. Not controlling China goods into the nation can cause negative impact on FDI. So they have to protect the interest of FDI. This also creates more FDI from China to set up a manufacturing there, so no tariff is imposed. IMO, that’s a smart move if they impose to the auto industry. Other things such as clothes, etc., that would probably generate high inflation, knowing that most of these comes from China. We’ll see.

    Like or Dislike: Thumb up 7 Thumb down 0
  • Pepap on Jul 01, 2024 at 5:25 pm

    Malaysia can do the same basis but not only on chinese brands to avoid other automakers ‘dump’ products in our country. For example, Malaysia can ban the sales of new vehicles that cost more than RM80k that still don’t have at least :-

    1. 2 USB-Cs at the front(USB-A is prohibited. This is 2024)
    2. Six airbags
    3. ADAS(blindspot monitoring, lane departure alert, pre-collision warning and braking)
    4. 360 camera with parking sensors
    5. Full led headlights and taillights and license plate
    6. Full led interior lighting
    7. Automatic up and down for driver’s window
    8. All four disc brakes
    9. Rear a/c vents

    I know this is ridicilous. But just how long we want to be a ‘dumpster’ nation?

    Like or Dislike: Thumb up 2 Thumb down 0
  • other gomens are taking care of their MSMEs, while our SMEs are left for dead, almost all policies effectively evaded SMEs and M40, kudos to our gomen

    Like or Dislike: Thumb up 3 Thumb down 0
  • Pro-Pakisstan on Jul 02, 2024 at 9:33 am

    Must deter trash from entering at all

    Like or Dislike: Thumb up 2 Thumb down 0
  • Tan Chin Sow on Jul 02, 2024 at 10:51 am

    Malaysia should do that a long time ago! We killed our own local SME industries. In the past we have our own small manufacturing companies that buil household goods and furniture’s. The No control of cheap imports from China with inferior quality killed our local industries. Many factories closedown and people out of jobs. I have a friend that build speaker box for local market and export now drive a school bus. Pathetic..
    Next example is Electrical wiring like 1 5mm, 2.5 mm PVC cable of unknown quality with copper mixed with iron. The copper can Rust and caused fire hazard as the wires will burnt due to no proer connectivity sue to Rust. Our country made fine cables and Indonesian will hand carry back die to good quality. Malaysia customer famous for cheap amd electrical contractors no.chouce but to use China inferior cables to do wiring.
    Madani government should look into our own SME companies so that they cam survive. All these are our asset.

    Like or Dislike: Thumb up 2 Thumb down 1
  • ROTI CANAI on Jul 03, 2024 at 7:06 pm

    china damn bola man…not like ministers here da ge here da ge there

    Like or Dislike: Thumb up 3 Thumb down 1
 

Add a comment

required

required