Abstract: This article explores the challenges and opportunities facing Indonesia in the context of the global trade war between the United States and China, as well as the impact of rapid digital transformation on international trade practices. By taking a free and active foreign policy position, Indonesia has the opportunity to strengthen its role in global trade, especially through e-commerce. The main focus of the analysis was on the role of Generation Z, who, as digital natives, are the main drivers in adopting technology and shaping new consumption patterns. In the face of global competition, the importance of strengthening local product brands, protecting domestic industries, and developing balanced trade policies is emphasized. In addition, collaboration between the government and society, particularly in supporting micro, small, and medium enterprises (MSMEs), is expected to strengthen Indonesia’s competitiveness in the international market. Thus, a strategic outlook is offered on how Indonesia can capitalize on opportunities in the digital age while protecting its economic interests.
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Amid the dynamics of the global trade war between the United States (US) and China and the rapid digital transformation, Indonesia is at a crucial point to determine the direction of its international trade policy—in this context, through e-commerce. Indonesia’s strategic position as a country with a free and active foreign policy can be leveraged to optimize opportunities amid global tensions, with a special focus on the perspectives and behaviors of Generation Z consumers as the main drivers of the digital economy. Through a combination of protecting local products and adapting to global e-commerce trends, Indonesia has the opportunity to strengthen its competitiveness in international trade, but this success requires active collaboration between the government and society in the implementation of strategic and sustainable trade policies.
Indonesia’s Position in the Global Trade War
Recently, the world was once again shocked by the trade war between the United States (US) and China. In reality, the tension between the two superpowers has had a significant impact on global trade, including Indonesia. As a country that consistently upholds a free and active foreign policy, Indonesia is in a unique position. The country maintains good relations with both parties, making it a strategic opportunity amid global tensions. The trade war started with the US imposing tariff increases, which resulted in many countries trying to push President Trump to negotiate. However, China was reluctant to negotiate and instead gave a surprise by imposing an import tariff of 125% on US products (Istibsaroh, 2025). This back-and-forth action continued for several rounds until finally China declared that the US had committed serious violations of international trade rights and World Trade Organization (WTO) regulations (Pribadi, 2025).
Digital Transformation and Changing Trade Patterns
In the era of globalization, technology has become an integral part of everyday life. Digital transformation has fundamentally changed the pattern of global trade, especially through the development of e-commerce. This change has accelerated since the COVID-19 pandemic, which forced people to shift from face-to-face transactions to remote purchases through digital platforms.
Since the revelation that luxury brand products (Hermes, Birkenstock, etc.) are much cheaper when purchased from Chinese manufacturers, there has been a significant increase in the purchase of these products through e-commerce platforms (Williams, 2025). This phenomenon shows how digital transformation and global trade dynamics influence each other.
Indonesia’s Gen-Z Shopping Behavior in the Digital Economy
Generation Z, as digital natives, plays a strategic role in shaping Indonesia’s digital commerce landscape. The significance of focusing on Gen Z in this research is based on their position as
- Key adopters of digital technology
- Long-term potential consumers who will determine the direction of Indonesian commerce
- A group with increasing purchasing power
Based on the survey, it was found that shopping through e-commerce platforms has become an integral part of Gen Z’s lifestyle in Indonesia. Marketplaces such as Shopee, TikTok Shop, and Tokopedia are the top choices, with Shopee dominating respondents’ preferences by 88.9%. This finding shows that Gen Z is not only adaptive to technological developments but also selective in choosing platforms that offer convenience, product variety, and a more interactive shopping experience. Although in limited proportions, around 64% of respondents reported purchasing products from overseas. This indicates a significant growth in cross-border trade through e-commerce among Gen Z, which contributes significantly to total digital transactions in Indonesia.
Economic Impact and Policy Challenges
The development of cross-border e-commerce creates a duality of challenges and opportunities for the Indonesian economy.
Opportunities:
● Easier consumer access to a variety of global products
● Potential for more competitive prices (often cheaper overseas products, such as from China)
● Improved distribution efficiency
Challenges:
● Competition to local MSMEs
● Consumer protection issues in international transactions (cybercrime)
● Foreign exchange leakage through consumptive imports
However, the author’s survey results also show that there is awareness among the public (including Gen Z) of the importance of protecting domestic products. Most respondents support regulations that aim to limit the free entry of foreign products in order to create space for the growth of local MSMEs. Support for this regulation shows that although Gen Z is open to global products, they still have a sense of ownership towards the development of national industries. They understand the importance of maintaining a balance between trade openness and protection of domestic businesses.
Building Trust in Local Products
Interestingly, the results of the survey also show that almost half of the respondents have confidence that the quality of local products can compete with imported products. Although this level of confidence is not yet dominant, this result shows that there is a strong enough foundation to build optimism for the future of the national industry. This belief, although not yet a majority, is an important asset for the development of the domestic industry. The momentum of the global trade war should be a catalyst for Indonesian MSMEs to develop products with competitive quality and prices. The strategy that can be taken is to increase branding and trust in local products. By building a strong reputation for quality, local products can maintain their position in the domestic market despite facing competition from imported products. This approach allows Indonesia to stay within the norms of trade liberalization while protecting the interests of domestic industries.
Data Regulation and Security in Cross-Border E-commerce
The development of cross-border e-commerce also presents crucial issues related to data regulation. Digital transactions involve the exchange of consumer personal data that requires protection. Indonesia needs to ensure a strong legal framework to protect user data, especially in international transactions. Regulations such as the Government Regulation on Trading through Electronic Systems (PMSE) and the implementation of digital taxes for international e-commerce platforms, which we can see in MOT 31 Year 2023 requiring foreign sellers to register themselves and be subject to SNI, VAT, and other standards if selling to the Indonesian market with the aim of creating a fair playing field between local and foreign players, are strategic steps in regulating digital trade (Pradana, 2024). However, there is still a need to harmonize regulations with international standards to facilitate e-commerce growth while protecting national digital sovereignty.
Policy Recommendations from the Author’s Perspective as Gen-Z
Based on the survey findings and analysis of global trade, the author will provide some policy recommendations that may be considered:
Strengthening the MSME digital ecosystem: providing access to e-commerce platforms, digital training, and financial support for MSMEs.
National branding strategy: develop a strong local product identity to increase consumer confidence and international competitiveness.
Balanced trade policy: designing policies that protect local producers while allowing active participation in global trade and not violating trade liberalization norms.
Human resources (HR) and manufacturing capacity building: Invest in workforce development and production technology to produce high-quality products.
Strengthening data regulation: developing a comprehensive legal framework to protect consumers in cross-border e-commerce transactions.
Overall, the Indonesian government should see the dynamics of the global trade war and digital transformation as a strategic momentum to improve the competitiveness of the national economy. With the support of a young generation that is adaptive to technology and has an awareness of local products, Indonesia has a strong foundation to optimize opportunities in global trade in the digital era. In addition, Indonesia’s success in utilizing global trade opportunities does not only rely on the role of the government. The Indonesian people, especially human resources (HR) in various sectors, need to actively collaborate with the government. Active participation of the community in supporting policies and programs designed by the government will strengthen Indonesia’s position. With good cooperation between the government and the community, Indonesia will have more power to compete in the international trade arena. This synergy is key so that Indonesia is not only a market for global products but also able to become an active player in the world trade chain through e-commerce. This momentum must be utilized together to strengthen Indonesia’s position in the global value chain while maintaining economic sovereignty and national interests.
