US Trade Pact Risks Retaliation Against Indonesia, Economist Warns

March 15, 2026 | 03:29 pm

TEMPO.CO, Jakarta - The agreement on reciprocal trade (ART) between Indonesia and the United States is skewed as Jakarta bears most of the obligation, according to Rimawan Pradiptyo, an economics lecturer at the Faculty of Economics and Business at Universitas Gadjah Mada (UGM).

"This is the first time in my career that I have dealt with an agreement like this, a decision that breached the preamble of the 1945 Constitution," said Rimawan during a virtual national seminar via Zoom on Saturday, March 14, 2026.

Indonesia may face retaliatory measures and World Trade Organization (WTO) lawsuits, as other countries could deem Indonesia to be granting preferential treatments to the United States.

The ART document outlines three clauses that protect the US' position, but a similar safeguard for Indonesia was moot, leading to a possible violation of Article 5 and Article 11 and the preamble of the 1945 Constitution.

The implementation of the reciprocal trade pact could require the government to make sweeping adjustments to domestic laws, from government regulations, presidential decrees, financial authority regulations, central bank regulations, and ministerial regulations.

Rimawan admitted to struggling to model the policy's theoretical impacts. He believes that the provisions in the ART, which require Indonesia to open up job and investment opportunities in the United States, are difficult to explain using the usual economic models.

He also questioned the provision stating that the Indonesian government needs to facilitate domestic companies to purchase goods from the United States. According to Rimawan, purchasing decisions are usually determined by the demand and willingness of the companies. 

The threat of additional tariffs of up to 10 percent in the agreement also puts Indonesia in an increasingly pressured position. Each stage of the agreement's implementation is potentially followed by threats of sanctions if its provisions are not fulfilled.

Rimawan also noted a pattern of relations in the ART document that could force Indonesia to follow the United States' trade policies. Meaning, Indonesia could be compelled to impose sanctions on a country even if it did not have prior issues with it. 

According to Rimawan, this could trigger reactions from other countries, which is a risky move since Indonesia, as a "small open economy," is vulnerable to external pressure from more powerful nations. 

Read: IPB Professor Says US Gains More from Indonesia Trade Deal

Click here to get the latest news updates from Tempo on Google News

Indonesia Needs Eyes Wide Open on Trump's 'Board of Peace'

5 jam lalu

The Cost of a Schoolbook

6 jam lalu

IPB Professor Says US Gains More from Indonesia Trade Deal

8 jam lalu

Facts About Acid Attack on Indonesian Activist Andrie Yunus

9 jam lalu

KPA: Acid Attack on Andrie Yunus Aimed at Silencing Activists

11 jam lalu

10 Top Travel Destinations in West Java During Eid Holiday

11 jam lalu

Rising Measles Cases in Yogyakarta Raise Concerns

11 jam lalu

Indonesia Intensifies Talks with Iran on Safe Hormuz Ship Passage

1 hari lalu

Indonesia Postpones D-8 Summit Amid Middle East Conflict

1 hari lalu

Coach Nova Arianto Pleased With Indonesia U-20 Team's Progress

1 hari lalu