Indonesia Urged to Beware of Impacts from US Reciprocal Tariff Agreement and Import Commitments

JAKARTA, KOMPAS.com - CORE Indonesia is urging the government to promptly submit written confirmation regarding the Agreement on Reciprocal Trade (ART) with the United States (US), as time is running short ahead of the agreement’s implementation.

For context, the ART agreement was signed on 19 February 2026 and will take effect after both countries complete their domestic legal procedures and submit written confirmations, with an effective period of approximately 90 days thereafter.

Sahara, Research Associate at CORE Indonesia, stated that the time available for Indonesia to provide written confirmation is increasingly limited, so the government needs to respond swiftly.

Based on simulations by CORE Indonesia, implementing the ART without revisions from Indonesia could pressure the national economy.

The first scenario involves Indonesia facing a 19 per cent reciprocal tariff with exemptions for 10 products.

Under this scenario, Indonesia’s exports are projected to decline by up to 1.86 per cent, while imports would rise by around 1.5 per cent.

“Indonesia is estimated to experience an economic growth contraction of 0.4 per cent, and there is also a risk of inflation in Indonesia when the ART is implemented,” she said.

In the second scenario, with a lower reciprocal tariff of 15 per cent imposed on Indonesia, the impacts are relatively more moderate, as exports and imports would still grow by 0.36 per cent and 0.43 per cent, respectively.

“However, the direction remains that Indonesia will still face a contraction, particularly in economic growth,” she added.

For instance, currently around 97 per cent of Indonesia’s beef imports come from Australia.

However, under the ART document, Indonesia is required to import approximately 50,000 metric tonnes of beef from the United States each year.

If Indonesia shifts its beef imports from Australia to the US in large quantities, it could trigger retaliatory actions from Australia.

Moreover, commodities from the United States are considered relatively more expensive compared to other major suppliers such as China, Australia, and Brazil.

For example, in commodities like beef and corn.

“When the purchase commitments in the ART are enforced, there is a tendency for Indonesia to be seemingly forced to buy from the United States at relatively higher prices,” she emphasised.