Tariff Uncertainty Clouds Indonesia-US Trade Pact; ASEAN Seen as Strategic Anchor

Tariff Uncertainty Clouds Indonesia-US Trade Pact, ASEAN Seen as Anchor Jakarta. Indonesia is reviewing its newly signed trade deal with the United States after the US Supreme Court struck down President Donald Trump’s reciprocal tariff policy, removing the legal basis for the tariff cuts Jakarta had just secured. The ruling came only hours after Indonesia and the US signed two key documents: the Implementation of the Agreement Toward a New Golden Age of US-Indonesia Alliance between President Prabowo Subianto and President Donald Trump, and an Agreement on Reciprocal Trade (ART) between Chief of Economic Affairs Minister Airlangga Hartarto and US Trade Representative Jamieson Greer. Initial optimism over 0% tariffs for several Indonesian exports quickly faded as legal uncertainty returned to the forefront. “This situation is very confusing given how fast developments have unfolded,” said James Losari, an international trade and investment law expert at the Journal of World Trade and Investment, during The Forum talk show hosted by B-Universe Media Group on Monday. James explained that the Supreme Court ruled tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were invalid because such measures must be authorized by Congress. “The Supreme Court decision is very clear. Tariffs imposed under IEEPA cannot be applied by the President. They must be enacted by Congress,” he said. However, he stressed that the broader ART agreement remains legally valid. “The agreement itself remains in force. Only the tariff component may be affected. The ART also covers cross-sector issues such as investment and digital trade, and those provisions remain valid,” James said. Both countries must still complete legislative ratification before the agreement can take effect. Moving ahead without clarity on tariff concessions, he warned, would be premature. “If Indonesia proceeds with ratification without clarity on the tariff concessions, that would be premature and could create confusion later,” he said, suggesting Jakarta seek clarification or even renegotiate provisions tied to now-invalid executive orders. Former Trade Ministry Director General and Indonesia’s former ambassador to the World Trade Organization, Iman Pambagyo, urged Jakarta not to wait. “Indonesia must be more proactive now. We need to contact our counterparts and ask, ‘What next?’” Iman said. He noted that tariff concessions were central to the negotiations, with the US demanding non-tariff commitments in return. “The US demanded improvements in our policy space, many referring to WTO agreements and good international practices. So while we clarify the tariff issue, Indonesia should also review what non-tariff commitments we can improve,” he said. “At the end of the day, this is about how Indonesia’s economy is perceived by all countries, not just the US.” Under the ART, Indonesia had secured 0% tariffs for selected products such as palm oil, cocoa, coffee and textiles within a broader 19% tariff framework. But James noted that the 0% provisions were also tied to the same legal instrument struck down by the court. “From a legal standpoint, the 0% tariffs were based on the same instrument. So with the Supreme Court decision, those provisions are also affected,” he said. The Trump administration later introduced a separate 15% tariff under the US Trade Act, which allows temporary tariffs of up to 150 days, subject to congressional approval for extension. According to Losari, there remains internal debate in Washington over whether the applicable rate should be 15% or revert to the previously discussed 19%. Iman said a uniform global tariff could, in some ways, create equal footing. “A global tariff creates equal footing. All countries face the same challenge. The real competition will depend on how efficiently we produce and export,” he said. Beyond the immediate tariff dispute, Iman argued that the episode highlights a broader global shift. “The world is moving toward a multipolar system. Overdependence on the US is increasingly seen as risky,” he said, adding that geo-economics and geopolitics are now inseparable. Both speakers said Indonesia should diversify its trade and investment partners, with ASEAN remaining the country’s strategic anchor. “Indonesia must play smart in this multipolar system. Our anchor should remain ASEAN,” Iman said, noting that regional stability has long supported Southeast Asia’s economic growth. Tags: Keywords: