The Domino Effect of Global Trade Tensions

Trump’s Import Tariffs and Their Impact on Indonesia’s Stock Market

Abstract

This study aims to analyze the impact of the United States import tariff policy announced by President Donald Trump on August 7, 2025, on the movement of the Indonesia Composite Stock Index (IHSG) on the Indonesia Stock Exchange. The study uses an event study approach by observing IHSG closing price data for 30 days before and 30 days after the policy announcement. Statistical analysis with paired sample t-tests is used to test differences in mean return. The results show a significant increase in the IHSG after the announcement of the tariff, indicating a positive response from the Indonesian capital market despite rising global uncertainty. These findings reinforce the relevance of the Efficient Market Hypothesis in the context of emerging markets and highlight the importance of reading global policy signals contextually, as well as the role of domestic sentiment in determining market reactions. This study also indicates the need for adaptive risk management, information transparency, and strengthening of market communication by regulators so that the capital market remains attractive amid global dynamics. Practical implications and opportunities for further research are discussed as contributions for regulators, investors, and academics to understand emerging market responses to protectionist policies by developed countries.