Economists Urge Indonesia to Follow Malaysia's Withdrawal from US Trade Agreement
The Executive Director of the Center of Reform on Economics (CORE), Mohammad Faisal, believes Indonesia should take the same stance as Malaysia regarding the Agreement on Reciprocal Trade (ART) with the United States.
As reported, Malaysia has formally withdrawn from the ART agreement with the United States following a US Supreme Court decision that invalidated the policy.
According to Faisal, although certain clauses in the ART are advantageous in some sectors, the overall impact of losses to Indonesia is far greater. “For example, we benefit from textile exports, but from other angles including critical minerals and the reduction of trade barriers across almost all commodities, the impact on our imports is clearly much larger. This is what America wants,” he told Media Indonesia on Tuesday (17 March).
Beyond trade, Faisal argued that the ART issue also concerns national sovereignty. Indonesia would be restricted from cooperating with countries that the United States considers detrimental to its national interests. This constrains Indonesia’s scope for manoeuvre and foreign policy space. Additionally, there are non-tariff measures and obligations to purchase American products.
“I believe the harms outweigh the benefits, so Indonesia should take the same stance as Malaysia and cancel the ART. Especially since in the US Constitution, Congress has already rejected it because it was deemed to violate constitutional standards. In reality, only up to 15 per cent was allowed,” Faisal said.
“With it now being invalidated, I think there is sufficient reason for us to also withdraw from the agreement,” he concluded.
Malaysia became the first nation to cancel the reciprocal trade agreement with the United States. Malaysia’s Minister of Investment, Trade, and Industry Johari Abdul Ghani stated on Sunday (15 March) that the Agreement on Reciprocal Trade between the two countries is no longer in effect.
The decision was made after the US Supreme Court on 20 February 2026 invalidated the reciprocal tariff policy of President Donald Trump’s administration, which was previously implemented under the International Emergency Economic Powers Act (IEEPA). The court determined that the President did not have legal authority to impose broad tariffs under this statute, causing the basis of the trade agreement to collapse.
“The agreement is not suspended. It no longer exists, it is void and no longer applies,” Johari stated.
Indonesia continues to remain committed to the ART agreement with the United States, contrary to Malaysia’s decision to withdraw following the US Supreme Court’s invalidation of the tariff policy. The Indonesian Press Council has highlighted concerns that the Indonesia-US trade agreement could open 100 per cent foreign ownership in the media sector and weaken digital platform regulations for the press.