CSIS: No Economic Benefits from Indonesia-US Trade Agreement

A researcher from the Department of Economics at the Centre for Strategic and International Studies (CSIS), Riandy Laksono, has concluded that the trade agreement between Indonesia and the United States generates no meaningful economic benefits. He stated that the Agreement on Reciprocal Trade (ART) document is fundamentally about how the US protects its commercial and security interests, rather than about tariff reductions.

Riandy explained that whilst 1,819 Indonesian products achieved zero-per-cent tariffs, this only covers approximately 2 per cent of Indonesia’s total exports. “Of all our exports to America, only 24 per cent received the additional zero per cent tariff. It should be noted that our exports to America constitute only 10 per cent of our total trade, so the total market access we secured represents just 2 per cent of our overall trade,” he stated during a media briefing at CSIS offices in Jakarta on Friday, 27 February 2026.

Another concern highlighted by Riandy involves textile products receiving zero-per-cent tariffs through a tariff rate quota mechanism. Under this scheme, the duty-free quota is determined by how much of the exported product uses raw materials sourced from the United States. The problem, according to Riandy, is that the majority of textile raw materials used in Indonesia—such as cotton and man-made fibres—are imported from China.

Riandy detailed that cotton imported from the US accounts for only approximately 8.6 per cent of supplies, whilst China accounts for 29.4 per cent. Man-made fibres from the US represent just 0.3 per cent, whilst China supplies 65.1 per cent. Furthermore, US raw materials are significantly more expensive. “Using raw materials from America will cause considerable disruption to the supply chain,” Riandy noted.

Nevertheless, Riandy argued that this agreement could protect Indonesia from the bullying tendencies characteristic of President Donald Trump, stating that no country is immune from the instability of US policy. Accordingly, Riandy characterised the government’s decision to sign the ART as an effort to secure Indonesia’s position. “If we cannot fight bullying, joining the gang is the least we can do. I think that is the answer,” he said.

President Prabowo Subianto and US President Donald Trump signed the reciprocal trade agreement (ART) in Washington DC on Friday morning, 20 February 2026 (Indonesian time). The signing formally implemented a 19 per cent tariff on Indonesian products entering the United States.

Coordinating Minister of Economic Affairs Airlangga Hartarto stated that the purpose and vision of the ART is to achieve prosperity, support robust supply chains, and respect the sovereignty of both nations. “So I emphasise this: respecting the sovereignty of each nation. That is part of the signed agreement,” Airlangga said during a press conference on Friday, 20 February 2026.