JAKARTA – The volatility in Indonesia’s stock market is expected to rise due to the escalating tariff war between the United States (US) and several countries, including China and Canada, according to analysts.

On Tuesday (4/3), China announced retaliatory tariffs of 10-15% on US imports, effective from March 10, 2025. This is China’s second round of tariffs, following a 10% tariff imposed in February.

Earlier, the US had imposed an additional 10% tariff on Chinese imports starting Tuesday, pushing total tariffs on imports from China to 20%. Moreover, the US has also implemented a 25% tariff on imports from Canada and Mexico on the same day, prompting Canada to retaliate with a 25% tariff on US imports.

US President Donald Trump still plans to impose tariffs on specific commodities such as steel, aluminium, cars, and pharmaceuticals. However, Bloomberg reports that there is no clear timeline for these new tariffs.

Analysts from Stockbit Sekuritas Digital note that this tariff war escalation is increasing global uncertainty and may lead to further interest rate cuts. The tariffs are expected to drive inflation and weaken US export performance.

“These dynamics will influence the direction of interest rates by the Fed,” stated Stockbit Sekuritas analysts.

Amid this uncertainty, Stockbit Sekuritas analysts also expect an impact on Indonesia’s stock market volatility. Therefore, investors are advised to consider short-term fixed-income instruments such as PBS003, which offers a 6.37% annual yield and a 2-year tenor.

“Investors with a higher risk appetite could consider quality stocks currently in correction, such as PT Bank Central Asia Tbk (BBCA),” they suggested. (KR/ZH)