The planned import tariff policy by U.S. President-elect Donald Trump and geoploitical instability have the plotential to trigger inflation in the U.S. and impact the commodity sector and the rupiah exchange rate, but on the other hand provide windfall profits from rising commodity prices, especially for Indonesia’s mining sector, an economist says.

"Trump said that he would apply tariffs on products from China of up to 60 percent, or even more, while products from other countries are subject to a 20 percent tariff. A policy like this will clearly trigger an increase in inflation in the United States," Chief economist at BCA Bank, David Sumual, said at the Minerba (Mineral and Coal) Expo held by the Ministry of Energy and Mineral Resources (ESDM), in Jakarta, on Monday, November 25, 2024.

The impact of this inflation, he said, has the potential to slow down the U.S. central bank's measures to lower the interest rates as previously expected. This also strengthens the value of the U.S dollar, where the U.S. Dollar (DXY) index is currently at 107, strengthening by around 7 percent.

"The strengthening of the dollar certainly puts pressure on the rupiah, but for the mineral mining sector, it actually provides a positive opportunity. Geopolitical uncertainty such as war also keeps commodity prices relatively high, although compared to 2022, prices have decreased due to the aggressiveness of the U.S. central bank in raising interest rates," David said.

He added that the trend of global interest rates which tend to decline in the future will have a positive impact on the mining and energy sectors, including coal. 

"In the short term, this sector may stagnate, but in the medium to long term, we see positive prospects," he cited.

David emphasized the importance of domestic economic policies to take advantage of global momentum, while maintaining the stability of the rupiah exchange rate amid international economic pressures.

"With ongoing global instability, the mining sector could benefit significantly," he concluded.