Commentary: My aunties now debate Trump's tariffs on Indonesia. Here's what they miss
Commentary: My aunties now debate Trump’s tariffs on Indonesia. Here’s what they miss
A good tariff deal means little if permits crawl and customs stumble, says a strategic communicator.
JAKARTA: Indonesian family WhatsApp groups are often a reliable barometer of national mood. So, when my aunties started debating tariff percentages – rather than forwarding TikTok videos about herbal remedies – it was clear that trade policy had gone mainstream.
They may not be economists, but they understand the scoreboard. Zero per cent is a win, 19 per cent acceptable, but anything higher a failure. It is intuitive, but also incomplete.
Tariffs are not a scoreboard. They are one variable in a much larger equation.
Investors rarely fixate on a single percentage point. They assess what that number implies about risk. How long do permits take? Are customs procedures applied consistently? Are rules of origin interpreted the same way across ports? Do regulations change midstream?
In practice, a five-point tariff difference can matter less than a six-month licensing delay.
UNCERTAINTY OVER RECIPROCAL TRADE AGREEMENTS
That reality has become more apparent following the recent ruling by the US Supreme Court that the Trump administration had exceeded its statutory authority, specifically its use of the International Emergency Economic Powers Act (IEEPA), in imposing certain global tariff measures.
The judgment has cast uncertainty over several reciprocal trade agreements, including Indonesia’s newly negotiated Agreement on Reciprocal Trade (ART) with the US. While the administration maintains that existing deals remain valid, the operationalisation of tariff concessions premised on IEEPA authority may now face legal and procedural complications.
The ART, which would have granted 1,819 Indonesian products tariff-free access to the US market, illustrates a broader point: Tariff policy can be politically volatile and legally contestable. Preferential access secured through diplomacy may not be as stable as it appears. In such an environment, predictability at home becomes the more durable competitive asset.
Indonesia’s ART followed similar framework arrangements concluded or advanced with Vietnam, Thailand and Malaysia. It was less a dramatic breakthrough than a move to avoid falling behind regional peers in managing exposure to US tariff measures. If tariff schedules across Southeast Asia converge or become legally uncertain, advantage shifts elsewhere.
Domestic sensitivities further complicate the picture. Perceptions of alignment with Washington remain politically charged.
Competing narratives about the ART are circulating simultaneously: that it represents a concession extracted under pressure; that it is a diplomatic win; and that it demonstrates Indonesia’s ability to maintain strategic balance amid great-power competition. The government has leaned towards the latter framing, describing the agreement as mutually beneficial. Narrative, however, does not substitute for execution.
NO GUARANTEE FOR EXPORT SURGES
The lesson is straightforward: Tariff elimination on paper does not automatically translate into seamless commercial uptake. The same constraint would apply to Indonesia’s new arrangement with the US. Reciprocal tariff commitments, even if ultimately upheld, will not guarantee export surges unless administrative systems move at comparable speed.
Regional competition sharpens the stakes. Vietnam has built export-oriented manufacturing zones that attract foreign direct investment through competitive labour costs and dense supply-chain linkages.
International benchmarks such as the World Bank’s Logistics Performance Index, which measures the efficiency and predictability of customs clearance processes, consistently rank Singapore, Malaysia, and Thailand ahead of Indonesia on border administration metrics. When tariff differentials narrow, even incremental advantages in documentation predictability or processing time can redirect investment flows.
Indonesia is not unaware of this challenge. The Online Single Submission system aims to consolidate licensing through a single digital portal. Recent regulatory adjustments, such as the Government Regulation 28/2025, aim to clarify timelines and improve inter-agency coordination.
These reforms are significant in design. Whether enforcement is consistent across investors’ touchpoints, from ministries to regional governments and ports, is another matter.
President Prabowo Subianto’s high approval ratings, surpassing levels recorded by his two predecessors, offer political space to rationalise overlapping authorities and enforce administrative discipline. Whether that capital translates into measurable improvements in bureaucratic performance remains to be seen.
In a reminder that investors prefer implementation over rhetoric, Moody’s recently revised Indonesia’s credit outlook to negative, citing governance quality and policy predictability as areas of concern.
Indonesia will remain attractive, given its market size and resource base. But when tariff policy abroad is unsettled, reliability at home becomes the differentiator.
My aunties are right that numbers matter. But the decisive number may not be the tariff percentage announced in a press release. It is the number of days between a signed agreement and a cleared container at port.
Sondang Grace Sirait is a strategic communicator and policy advocate based in Jakarta. This commentary first appeared on the Lowy Institute’s site, The Interpreter.