How the Indonesia–US Agreement Impacts Indonesia's Trade Structure
PROGNOSA Research & Consulting believes that the United States’ reciprocal tariff policy through the Agreement on Reciprocal Trade (ART) could position Indonesia strategically in Southeast Asia. The policy could open competitive space for the national industry, particularly the textile sector and several flagship commodities.
‘This agreement presents opportunities as well as risks that need to be anticipated carefully by the government and industry players in the archipelago,’ said Garda Maharsi, Director of Prognosa Research & Consulting, at a press conference entitled ‘US–Indonesia Agreement on Reciprocal Tariff: Strategic Impact Analysis for Industry in Indonesia’ at Hotel Des Indes, Central Jakarta, Thursday evening, 5 March 2026.
Garda explained that the agreement also includes changes to Indonesia’s export structure to the United States. According to him, downstream export shares to the US are expected to adjust from 32 percent to 19 percent, alongside a commitment by Indonesia to purchase American products worth US$38.4 billion.
In his study, Prognosa also discusses adjustments to non-tariff policies that could influence the competitiveness of the national industry, reliance on imports, and the downstream agenda. Garda believes that these conditions could open up a significant degree of competitive space for several Indonesian industries, especially textiles and other flagship commodities.
However, he warned that the obligation to purchase American products valued at US$38.4 billion, covering the energy, aerospace, and agriculture sectors, could fundamentally alter the country’s trade structure if not balanced by appropriate mitigation policies.
According to Garda, the government should ensure that affected sectors receive support through commitments to knowledge transfer and technology transfer. This step is considered important so that this trade policy remains aligned with the national value-added economy agenda.
He also advised the government to take strategic steps to maintain domestic industry competitiveness, including aligning with international standards, strengthening the logistics industry, and developing sustainable financing schemes. With such support, trade agreements like ART are seen as potentially part of Indonesia’s integration into Global Value Chains.
Garda noted that Prognosa Research & Consulting uses Vector Error Correction Model (VECM) approaches and Impulse Response Function (IRF) analysis to map short-term and long-term impacts on the trade balance, sector resilience, and Indonesia’s sustainable development performance.