Indonesia's Shoemaking Sector Sees Dramatic Gains Amid US-China Trade Dispute

Shoemaking Industry
Sports shoes are displayed at a Foot Locker store (Photo: Reuters / Susana Vera)

Following the implementation of increased tariffs for Chinese imports, US companies are now more reluctant to buy from Chinese companies as it would dramatically decrease their profit margins.

While this may be a bad thing for Chinese manufacturers, other countries are apparently benefiting from the ongoing trade war between China and the United States. One of those countries is Indonesia, which apparently has recently seen a big boom in select industries.

According to the Bank of Indonesia, exports in the country have dramatically increased in select sectors following the shift of the supply chain from China to other Southeast Asian nations. The trade dispute between China and the United States, which has now lasted for almost a year, has resulted in increased tariffs on hundreds of billions of goods being imported and exported from both countries.

While the trade war has hurt major sectors throughout Asia, other emerging sectors have apparently benefited. Indonesia's footwear sector, in particular, has seen some massive gains over the past few months.

Data from the US Commerce Department has revealed that footwear exports from Indonesia have increased over the past few months. From January to April of this year, Indonesia exported around $559.91 million worth of footwear products to the United States.

This was a 6.7 percent increase when compared to the same period last year. This was also almost double the growth rate from the country's exports in 2017, which stood at 3.5 percent.

Meanwhile, China's footwear imports to the United States, which accounts for more than half of all footwear products in the country, fell by 1 percent in 2018. That 1 percent was a drop of over $139 million worth of footwear being imported from China.

Based on the current trends, Analysts predict that Indonesia's footwear exports could increase from $5.3 billion in 2018 to $6.5 billion for 2019. This is a drastic 23 percent increase. However, the only way for this to happen is if the US continues its trade war with China and if more US companies will choose to find other suppliers in light of the tariffs.

Apart from Indonesia, Southeast Asian countries such as Vietnam and Malaysia have gained in certain industries. Most US companies have already implemented radical changes to diversify their operations in order to avoid the higher tariffs.

The deputy governor of the Bank of Indonesia, Dody Budy Waluyo, explained that smaller economies are now getting the spillover from the fight between two of the world's biggest economies. This is, of course, a very small consolation to the overwhelmingly bigger impact of the trade tensions on the global economy.

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