Jayanty Nada Shofa, Jakarta – An analyst has warned that Indonesia should watch out for retaliatory measures from China, which could even morph into an international trade lawsuit, following Jakarta's tariff deal that largely benefited Washington.
Indonesia recently signed a hard-earned tariff pact with the Donald Trump 2.0 government. While the Indonesian government claimed it as a win-win, the deal has sparked criticisms after its provisions turned out to heavily favor US economic interests. It lets American goods enter the Indonesian market duty-free, while Indonesian products are stuck with a 19% tariff despite some exceptions. A poison pill clause that restricts Jakarta's freedom to choose who to trade with also becomes a controversial provision in the 45-page document.
Bhima Yudhistira, the executive director of the economic think-tank Celios, recently told a press briefing that the deal could ruffle the feathers of Indonesia's partners. They might even sue Indonesia at the World Trade Organization (WTO), possibly expanding the list of disputes that Jakarta faces at the global court.
The Jakarta Globe asked Bhima which country would be the first to retaliate to the point of lodging a WTO complaint. Bhima said it would likely be China: Indonesia's top trading partner and investor.
"The Indonesia-US deal is still subject to lawmaking processes. But in the meantime, China will possibly prepare non-tariff barriers. This includes requiring Indonesian goods to have multiple layers of certification," Bhima said.
"If those barriers are deemed insufficient, they could file a lawsuit at the WTO. This would be very costly and taxing for Indonesia.... And because Indonesia gives exclusivity to the US, the chance of us losing is high."
The retaliatory measures can also deal a fatal blow to Indonesia's investment inflows, according to Bhima.
This was not the first time analysts had warned that the deal could anger other parts of the world.
Prior to the signing, senior economist Yose Rizal Damuri had said that the one-sided deal could upset the European Union (EU). Indonesia and the EU are expected to ink a free trade pact in the coming months. However, the deal is perceived as more mutually beneficial compared to that of Washington, as both sides agreed to set the import duties at 0% when doing business with one another.
"Remember it took us almost 10 years to secure a trade deal with the EU, but the US managed to secure better terms in a matter of months," Yose said early this year.
China has not pursued legal action against Jakarta at the WTO in recent years. The EU, on the other hand, has several cases with Indonesia, ranging from biodiesel to nickel-related disputes.
Indonesia reported that its trade with China neared $154.6 billion last year. Export-import activities with Hong Kong were valued at $5.5 billion. Both have always maintained the top 3 positions as Indonesia's foreign investments. Hong Kong investors had put around $10.6 billion in Indonesia throughout 2025. Indonesia saw $7.5 billion in Chinese investments that year, while US investors only contributed almost $3 billion, government data showed.
Source: https://jakartaglobe.id/business/us-deal-indonesia-should-watch-out-for-chinese-barriers-wto-lawsui