US Supreme Court Ruling Creates Momentum for Indonesia to Review Reciprocal Trade Agreement
JAKARTA — The Executive Director of the Centre of Reform on Economics (CORE) Indonesia, Mohammad Faisal, has said that the United States Supreme Court’s decision to strike down President Donald Trump’s reciprocal tariff policy should serve as a momentum for Indonesia to review the Agreement on Reciprocal Trade (ART).
On Friday (20 February) local time, the US Supreme Court voted 6-3 to rule that President Trump did not have the authority to impose global tariffs under the International Emergency Economic Powers Act (IEEPA). The ruling came just one day after Indonesia and the United States signed the ART.
Faisal said that trading partner countries, including Indonesia, should now pursue renegotiations. “From what we agreed to and signed, there are many losses that we face,” he stated.
Although Trump had announced a “global import tariff” of 10 per cent, Faisal stressed the importance for Indonesia to carefully scrutinise several points in the ART document that are considered unfavourable. He noted that Indonesia now has the opportunity to renegotiate the 19 per cent reciprocal tariff that had been imposed.
Faisal highlighted that the agreement contradicts the downstream industrialisation programme that the Indonesian government has been promoting. He pointed out that most of the products receiving tariff exemptions under the ART are raw, unprocessed materials such as palm oil, coffee, cocoa, spices, and rubber. This, he warned, has the potential to hinder the country’s downstreaming efforts.
The CORE executive director emphasised that the government should not neglect the acceleration of the downstream industrialisation agenda, as reducing barriers for exporting raw materials would make it harder to promote agricultural and mining sector industrialisation — both of which are government priority programmes.
Faisal further noted that there are many consequences with major negative impacts for the domestic economy if the agreement is implemented in its current form. He urged the government to use this moment to secure more favourable terms that align with Indonesia’s long-term economic development strategy.
Following the Supreme Court ruling, Trump reportedly attempted to impose tariffs through alternative means, using different procedures or legislation. Indonesia has confirmed that further discussions on tariff matters will take place in light of the court’s decision.