U.S's President Donald Trump and European Commission's President Jean-Claude Juncker give statement on their meeting at the White House on July 25 - Photo by EC

JAKARTA (TheInsiderStories) – Good morning. China may no longer content only with retaliatory measures in the escalating trade war with the the United States (US) and could soon go on an offensive as the President Donald Trump is set to announce more tariffs on Chinese goods worth $200 billion.

The offensive strategy comes in the form of export restriction of key commodities for US manufactures like rare earth, which is an essential component in the production of smart-phones and other electronics products.

China is the world-largest producer of rare earth, controlling around 90 per cent of the global supplies. However, such an offensive posturing may warrant a more aggressive response from the US administration and fuel the negative sentiments already prevalent among US policymakers.

The billionaire president, meanwhile, used twitter to boast the US ‘strong bargaining position’ on trade deals after imposing tariffs. He went on to warn other countries which failed to make ‘a fair deal’ on trade will also be slapped with tariffs.

Still related with trade, the Statistics Indonesia announced on Monday that Indonesia’s trade deficit stood at US$1.02 billion in August, narrowing from US$2.01 billion in August.

Exports fell 2.9 per cent month-on-month but rose 4.2 per cent from a year ago to US$15.8 billion. Imports fell 8.0 per cent month-on-month but surged 24.7 per cent year on year to $16.8 billion.

ING said Indonesia’s trade result would mean that current account deficit at around $8 billion in the third quarter, or close to 3 per cent of gross domestic product, which is the result for the second quarter.

Furthermore, ING also expected that Indonesia’s persistent weak external balance would continue to push the rupiah into a weakening trajectory.

The trade result put pressures on the domestic financial market. The Rupiah weakened to 14,859 per US$1 from 14,835 versus the greenback. The Jakarta Composite Index also fell 1.8 percent to 5,824 with foreign investors net sold equity worth Rp395 billion (US$27.24 million).

Positive sentiment may come from Bank Indonesia’s announcement that Indonesia’s external debt chalked up slower growth in July. Indonesia’s external debt stood at $358.0 billion in July, a 4.8 percent growth versus 5.5 percent in June.

Another key development came from the government’s decision to inject the universal health care provider BPJS Kesehatan with Rp4.99 trillion in capital to plug its widening deficit to cover the cost of the universal health care program which is estimated to hit Rp10.98 trillion by end of the year.

The decision would boost shares of drug makers like PT Kalbe Farma (IDX:KLBF)and PT Kimia Farma (IDX:KAEF) which had claimed some Rp7.5 trillion in late payable derived from the universal health care program.

From politics, another influential politician from the opposition decided to break ranks and joined the ruling coalition. This time is Soetrisno Bachir, a former chairman of the Amanat Nasional Party, which stands with the opposition in the next general and presidential election.

US$1: Rp14,500

May you have a profitable day.

TIS Intelligence Team, Email: theinsiderstories@gmail.com