United States President Donald Trump’s return to sweeping tariffs – including a 25 per cent levy on auto imports, a 10 per cent tariff across the board and a steep 32 per cent reciprocal rate on Indonesian exports – marks a defining moment in the reshaping of global trade and power dynamics.

For Southeast Asia, and especially for Indonesia, this is not just another chapter in the US-China rivalry; it is a direct economic hit.

Key Indonesian sectors such as textiles and shrimp exports have already been feeling the pinch, while the rupiah has tumbled to its lowest point since the 1997-1998 Asian financial crisis.

But more than a predicament, this is a call to action.

The era of multilateral globalisation is fading. What comes next must be defined by regional resilience, energy independence and strategic vision.

Currently, Indonesia is undergoing a foreign policy shift. President Prabowo Subianto’s appointments of Prof. John Mearsheimer, a leading voice in offensive realism, and Prof. Jeffrey Sachs, a Nobel laureate in economics and global advocate for sustainable development, suggest a dual doctrine, security strength guided by social justice.

This blend may prove crucial in navigating a world of economic coercion and hardening alliances.

While Trump’s tariffs are aimed at domestic politics, their impact on Southeast Asia will be significant. ASEAN economies, deeply integrated into global supply chains centred around Chinese manufacturing, face serious disruptions, especially in intermediate goods and auto parts.

This protectionist shift undermines trust in the US as a stable economic partner, even as its role as a security counter-weight to China continues to grow.

China’s regional role is equally complex. Despite deep economic ties with Southeast Asia, trust deficits persist.

According to the ISEAS – Yusof Ishak Institute’s State of Southeast Asia: 2024 Survey Report, many in the region remain wary of China’s strategic ambitions.

While over 50 per cent of respondents expect relations with China to improve, significant concerns remain, particularly regarding China’s assertive actions in the South China Sea and Mekong region.

Just recently, for example, skirmishes between Beijing and Manila in the natural resource-rich maritime territory have been intensifying.

This paradox of economic interdependence and strategic anxiety underscores ASEAN’s urgent need for unity and legal clarity.

Trust must be earned not just through infrastructure alone, but through restraint and respect for international law.

If ASEAN is to thrive in this fractured world, it must stop playing defence. That is why I propose the Nusantara Fund – a regional sovereign wealth fund cogoverned by all ASEAN member states and powered by Japan as a strategic partner.

As the ISEAS survey found, Japan is seen by the respondents as the most trusted partner of ASEAN.

The purpose of the fund is to build strategic economic sovereignty.

Through the fund, ASEAN can invest in regional manufacturing capacity, such as electric vehicle (EV) batteries, agroindustry, and semiconductors. It can also be used to fund logistics and maritime infrastructure like ports, rail, and digital connectivity across ASEAN.

Additionally, the fund can support the region’s green energy transition industries, including hydrogen, solar, and biofuels, especially in underserved areas.

In a nutshell, this fund would allow ASEAN to stand on its own feet – less dependent on external creditors and less exposed to sudden shocks like tariffs or supply chain disruptions. It is both a strategic tool and a symbol of our collective autonomy.

Indonesia, now a net oil importer, must also respond to the inflationary pressure and volatility created by global sanctions and energy competition. Here, Russia offers a quiet but necessary opportunity.

Indonesia has been exploring energy cooperation with Russia under its new BRICS affiliation.

Although this move is rooted in economic necessity, it must be pursued with diplomatic care and continued engagement with the US in areas such as the Just Energy Transition Partnership.

The Nusantara Fund could support renewable energy transition projects – biofuels, solar grids, and community-based energy storage – to reduce the need for politically sensitive energy imports.

As the big power rivalry intensifies, ASEAN must reject the binary choice. Instead, the region should strengthen its own internal security cooperation – through shared intelligence, maritime domain awareness, and a long-overdue binding Code of Conduct in the South China Sea.

The world is fragmenting, and the future will not be inherited by the biggest economies, but by those with the clearest moral and strategic compass.

ASEAN must become not just a region of stability – but of direction.

As the region’s largest economy, Indonesia, under Prabowo’s evolving vision, must lead the way: Not in isolation, but in innovation. Not by reacting to the world’s changes, but by shaping them.

(Yenny Wahid is a politician, Director of The Wahid Foundation and an advocate of inclusive economic development, regional cooperation and strategic autonomy for Southeast Asia.)