The trade agreement between the United States (US) and China to reduce tariffs has created a positive outlook for Indonesia. There is strong hope that it will especially benefit the domestic stock market.

As outlined in the agreement made on Monday (May 12), US tariffs on Chinese products will be reduced from 145% to 30%, and China will lower tariffs on American goods from 125% to 10%. This change will be in effect for the next 90 days.

US President Donald Trump praised the agreement, saying it proves that his aggressive tariff strategy is yielding results—coming after a preliminary deal with the UK and now a deal with China.

“They’ve agreed to fully open up China, and I think this will be great for China, and I think it will be great for us,” said Trump at the White House, quoted by Reuters on Tuesday (May 13, 2025).

Trump also described this agreement as “a first step” toward achieving long-term trade fairness.

Wall Street Reacts Positively

The US stock market welcomed the news on Monday with broad gains. However, on Tuesday’s trading session (May 13, 2025), the market closed mixed.

The S&P 500 rose by 0.72% to close at 5,886.55, while the Nasdaq Composite climbed 1.61% to 19,010.08. On the other hand, the Dow Jones Industrial Average fell by 269.67 points, or 0.64%, as a nearly 18% drop in UnitedHealth shares weighed on the index.

One key highlight of Monday’s rally was the sharp rise in major tech stocks. The market cap of companies like Google and its peers surged by a total of US$ 837 billion in just one day.

Market Cap Increase of US Tech Giants

Positive Outlook for Indonesian Stock Sectors

The positive impact is not limited to the US. As the Indonesian Stock Exchange opened on Wednesday (May 14, 2025), the Jakarta Composite Index (IHSG) and various sectors were projected to see gains.

On Friday (May 9, 2025), IHSG rose slightly by 0.07% to 6,832, with a transaction value of Rp9.01 trillion, involving 19.18 billion shares across 1.11 million trades.

Most sectors are expected to move into the green zone, especially blue-chip stocks in commodity, tech, and banking sectors.

1. Tech Stocks

Following the tariff agreement, tech stocks received a significant boost. Global tech firms—like Apple, Nvidia, and AMD—rely on global supply chains, including manufacturing in China and export markets in Asia.

With reduced trade tensions, the risk of supply disruptions and added costs like tariffs diminishes, supporting profit margins. This positive sentiment could carry over to Indonesian tech stocks, as global demand for tech products rises.

When uncertainty fades, businesses and consumers are more willing to spend on tech. As tariffs are removed or reduced, the cost of imported tech goods drops, improving company profitability.

2. Banking Stocks

Investors are shifting capital toward Asian markets, which could increase the valuation of undervalued Indonesian banking stocks.

3. Commodity Stocks

With trade tensions easing, global raw material prices become more stable. This benefits commodity exporters, especially those shipping to China—such as nickel and steel—due to anticipated rising demand.

4. Basic Materials Sector

The 90-day tariff reduction allows US and Chinese manufacturers easier access to raw materials, including those from Indonesia. This could boost Indonesian raw material exports to global markets, especially China.

5. Property Sector

Lower global tensions foster economic stability and boost investor confidence. Foreign investment is expected to rise, particularly in industrial and residential property developments. Additionally, stable interest rates and government support for real estate investment further encourage growth.

Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas Indonesia, said the trade truce could act as a strong positive sentiment for the market, potentially driving it into a more stable short-term bullish phase.

“The reduced systemic risk from the trade war is prompting global investors to embrace risk-on strategies. This could support foreign capital inflow into Indonesian bonds and stocks—especially if global interest rate trends remain accommodative,” Liza noted in her statement.