Ria Fortuna Wijaya, Jakarta – Indonesia's Agreement on Reciprocal Tariff (ART) with the United States is increasingly seen by economists as a structural policy gamble rather than a straightforward export breakthrough.
The deal removes US tariffs on 1,819 Indonesian products. In exchange, Indonesia is expected to open nearly 99% of its tariff lines to US goods at 0%, creating what analysts describe as an asymmetrical arrangement.
A February 2026 report by the Institute for Economic and Social Research at the University of Indonesia (LPEM UI) argues that the risks could outweigh the benefits. While tariff elimination grabs headlines, the report identifies non-tariff commitments as more consequential.
These include harmonizing standards with US sanitary and technical benchmarks, recognizing US certifications, easing import licensing, limiting local content requirements, and committing to purchasing US energy and agricultural products.
Such provisions, the report warns, could narrow Indonesia's industrial policy space, weaken downstreaming strategies, increase imports, trigger trade diversion, and deepen dependence on a single partner.
Sovereignty concerns have intensified scrutiny. One clause requires Indonesia to adopt "equivalent restrictive measures" if Washington imposes economic restrictions on a third country.
"From the perspective of economic policy, to a certain extent, Indonesia must follow US policy related to national security," said international trade law expert James Losari.
Lili Yan Ing, Secretary General of the International Economic Association, cautioned that several measures "strongly challenge Indonesia's sovereignty," raising questions over whether policy decisions risk falling under another country's influence.
Halal certification has also become contentious. Under ART, US halal certificates issued by approved bodies will be recognized through a Mutual Recognition Agreement, potentially reshaping domestic regulatory authority.
Uncertainty deepened after the US Supreme Court struck down President Donald Trump's reciprocal tariffs, replacing them with a universal 10% tariff that could rise to 15%.
LPEM recommends a calibrated response: renegotiating specific provisions or applying reciprocal measures within WTO rules. Over the longer term, it suggests formalizing trade ties under a rule-based framework such as a free trade agreement to ensure stronger legal certainty and a more balanced negotiating position.
Source: https://jakartaglobe.id/business/beyond-tariffs-indonesias-uneven-pact-with-washingto