Jayanty Nada Shofa, Jakarta – Indonesia has signed a poison pill clause in the US trade agreement, which includes provisions that analysts warn are Washington's attempt to counter China.
President Prabowo Subianto's Washington trip reached its climax from an economic standpoint when Indonesia inked its hard-fought US reciprocal trade accord. Despite the government's past denials of poison pill clauses, the 45-page document tells a different story.
Under that deal, the Donald Trump 2.0 administration has threatened to terminate the agreement and reimpose the April tariff hikes if Indonesia strikes a new trade pact with a country that "jeopardizes" Washington's "essential interests" – similar to what close neighbor Malaysia has accepted.
However, the US will only consider this move if consultations with Jakarta "fail to resolve its concerns". There is also a similar clause on digital trade accords, although of a softer tone that does not mention cancellations.
"Indonesia shall communicate with the US before entering into a new digital trade agreement with another country that jeopardizes essential US interests," the document reads.
The Malaysian deal has that clause as well, with the same wording, except Kuala Lumpur's uses "consult" instead of "communicate". But neither tariff agreement explicitly states which country the US is referring to.
However, analysts agree that the US has China in mind when proposing these provisions. Mohammad Faisal, the executive director of the think-tank Core Indonesia, said that Washington might be worried about Jakarta being chummy with Beijing in the economic sphere.
"The [newly signed] deal is actually not just about US-Indonesia or rebalancing deficit trade. Behind it is a bigger agenda of restricting China's growth and geopolitical influence, including by weakening Beijing's dominance in global trade and critical mineral supply chain," Faisal told the Jakarta Globe on Friday.
Faisal pointed out the provision that would let the US gain access to Indonesian critical minerals. The expert warned that this could be one of Trump's tricks to take a better hold of Indonesian critical minerals, which have been amply controlled by Chinese investors.
Bhima Yudhistira, who heads the think-tank Celios, said the deals so far have clearly been largely in favor of the US, which he found to be ironic, considering Indonesia's "free and active" foreign policy. The economist compared the deal to Indonesia's free trade pact with the European Union (EU), which did not restrict Jakarta from working with other countries.
"I doubt Indonesia has ever had trade agreements that offer such poison pills," Bhima told the Globe.
Chief negotiator Airlangga Hartarto did not mention this termination threat during the press briefing that came after the signing, although the minister was content that Washington had agreed to scrap the provisions unrelated to trade.
For instance, the US was willing to remove "provisions related to the South China Sea", Airlangga said, referring to the strategic waterway that has become the subject of territorial disputes between Beijing and several ASEAN members. Asked about the possibility of Chinese goods entering the US via Indonesia, Airlangga responded that the agreement in question "does not involve third countries.
As per writing, Airlangga's spokesman Haryo Limanseto has not responded to the Globe's queries on this poison pill.
The latest agreement keeps the US tariffs on Indonesian goods at 19%, down from the 32% rate that Trump originally introduced back in April. Indonesia has also secured tariff exemptions for thousands of goods, including palm oil and electronic components. When Trump launched his tariff salvo last year, he claimed that the move was necessary to shrink his country's trade deficit.
Tariff deal aside, Indonesia's export-import activities with the US' top rival have been burgeoning in recent years. Data showed Indonesia-China trade neared $154.6 billion throughout 2025, up 13.16% year-on-year. Trade with Hong Kong reached $5.5 billion that year.
China and Hong Kong have always been Indonesia's top 3 sources of foreign investments. According to the government stats, the investment inflows from Hong Kong totaled $10.6 billion throughout 2025. Indonesia saw $7.5 billion Chinese investments that year, while US investors only put less than half of that number or just close to $3 billion.