JAKARTA, KOMPAS \u2014 The trade agreement between Indonesia and the\nUnited States is asymmetric in nature and risks deepening Indonesia\u2019s\neconomic dependence on the United States. Behind the tariff reductions\non 1,819 Indonesian product lines lie a number of binding obligations\nthat narrow the scope of national industrial policy.<\/p>\n
President Prabowo Subianto and US President Donald Trump signed a\nreciprocal trade agreement (ART) entitled \u201cToward a New Golden Age for\nthe US-Indonesia Alliance\u201d in Washington DC on Thursday (19\/2\/2026)\nlocal time.<\/p>\n
Under the document, the US reduced import duties on 1,819 Indonesian\nproduct lines to zero per cent whilst maintaining a general reciprocal\ntariff averaging 19 per cent.<\/p>\n
In return, Indonesia granted zero-tariff treatment and various\nnon-tariff concessions for US-origin products, as well as agreeing to a\nnumber of commitments in the areas of investment, digital trade, and\nstrategic minerals.<\/p>\n
Deni Friawan, an economist at the Centre for Strategic and\nInternational Studies Indonesia (CSIS), argued that amid rising global\nprotectionism, assured access to the US market provides Indonesia with a\ndegree of \u201csecurity.\u201d<\/p>\n
\u201cLeading products such as palm oil, cocoa, coffee, textiles,\ngarments, and footwear stand to expand their markets with tariff\ncertainty,\u201d he said when contacted from Jakarta on Friday\n(20\/2\/2026).<\/p>\n
Integration into US strategic supply chains, particularly for\ncritical minerals and energy transition materials such as electric\nvehicle batteries and rare earth metals, Deni continued, could help\ndiversify Indonesia\u2019s export markets, which have hitherto been heavily\nreliant on China.<\/p>\n
Deni also assessed that commitments on regulatory transparency,\nstrengthening intellectual property rights, and facilitating digital\ntrade have the potential to improve the long-term investment climate.\n\u201cIf managed properly, the ART could serve as a momentum for industrial\nupgrading and encourage foreign direct investment inflows,\u201d he said.<\/p>\n
However, Deni warned of serious consequences for Indonesia\u2019s policy\nspace. A number of commitments were deemed to restrict the government\u2019s\nflexibility in pursuing its national industrialisation strategy.<\/p>\n
\u201cFor a country still in the catching-up stage like Indonesia, policy\nspace is a valuable asset. Reducing it without a clear compensatory\nstrategy risks deepening dependence,\u201d he said.<\/p>\n
Deni also highlighted potential pressure on domestic producers from\nthe opening of imports of US agricultural and food products. Without\nproductivity improvements and adaptation programmes, liberalisation\ncould trigger social and economic pressures.<\/p>\n
In the medium term, the risk of trade imbalances must also be\nanticipated if imports grow faster than value-added exports. Such\nconditions could widen the trade balance deficit and put pressure on the\nrupiah exchange rate.<\/p>\n
Nailul Huda, Economics Director at the Center of Economic and Law\nStudies (Celios), assessed that Indonesia was in a disadvantageous\nnegotiating position. The granting of zero-per-cent tariffs on more than\n98 per cent of US-origin products and energy import obligations could\nwiden the trade imbalance.<\/p>\n
\u201cI feel Indonesia has lost on many fronts. The 19 per cent tariff\ncannot simply be called a victory because it is highly dependent on\nnon-tariff agreements,\u201d he said.<\/p>\n
From the perspective of national industry, he saw potential pressure\non exports and limited scope for market share expansion. The palm oil\nsector may indeed benefit, but more because of US dependence on that\nproduct.<\/p>\n
Huda also questioned the extent to which US mineral investment would\ndrive technology transfer. \u201cHas there actually been any knowledge\ntransfer from US critical minerals company investments in Indonesia? We\nmust ensure it is not merely resource exploitation,\u201d he said.<\/p>\n
In digital trade, he expressed concern about restrictions on\nIndonesia\u2019s ability to impose taxes or regulations on US technology\ncompanies. Another issue is the provision requiring Indonesia to consult\nwith the US before entering into digital agreements with other\ncountries.<\/p>\n
Achmad Nur Hidayat, an economics lecturer at UPN Veteran Jakarta,\nassessed the ART agreement as asymmetric in design. \u201cThis is not\nreciprocal in the sense of being equal. We are opening many doors; they\nare providing one door that remains guarded by tariffs,\u201d he said.<\/p>\n
According to Achmad, Indonesia\u2019s obligations under the ART concern\nnot only tariffs but also domestic policy discipline, ranging from\nproduct standards, local content requirements (TKDN), food, halal\ncertification, personal data, critical minerals, to foreign exchange\nfrom natural resource exports.<\/p>\n
He highlighted provisions requiring Indonesia to accept US standards\nor certain international standards without additional requirements. This\nwas deemed to shift national regulators\u2019 authority in determining\nproduct entry standards.<\/p>\n
Achmad also criticised the exemption of US companies and products\nfrom TKDN requirements. According to him, TKDN is an industrial policy\ninstrument for promoting domestic supply chain growth and technology\ntransfer.<\/p>\n
\u201cIf one country is granted an exemption, TKDN loses its bite as a\ntool of economic sovereignty,\u201d he said.<\/p>\n
On the digital front, he assessed that commitments on cross-border\ndata transfers and recognition of US data protection standards could\nlimit Indonesia\u2019s ability to design independent digital economic\npolicies. \u201cWhen cross-border data flows are made a trade commitment, a\ncountry relinquishes part of its ability to regulate its own digital\neconomy,\u201d Achmad said.<\/p>\n
He also highlighted commitments to eliminate restrictions on critical\nmineral exports to the US and facilitate investment without certain\nownership limitations. Such policies were deemed to potentially erode\nthe downstream processing strategy that has been built up over time.<\/p>\n
\u201cDivestment and ownership limits are not merely protectionism but\nlevers to ensure value addition and control do not leak abroad,\u201d he\nsaid.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/economists-indonesia-us-trade-deal-is-asymmetric-1771759242", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }