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FTA with US ‘unlikely’ under Trump but nickel deal may be doable
The re-election of Donald Trump as United States president will likely do little to ease talks with Jakarta about a free-trade agreement (FTA), but such a deal may not be necessary to open the US market for Indonesian nickel.
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Operations at a nickel smelter are pictured at the Indonesia Weda Bay Industrial Park in Lelilef, North Maluku, on July 7, 2024. (AFP/Azzam Risqullah)
T
he re-election of Donald Trump as United States president may complicate talks with Indonesia about a free-trade agreement (FTA), but such a deal may not be the only way to open the US market for Indonesian nickel, experts believe.
Securing an FTA focused on critical minerals, something Jakarta has long sought from Washington, may only get harder as the incoming administration is set to double down on tariff barriers.
“The prospects of a limited FTA seem very small, considering the high probability of increasingly protectionist policies under Trump,” Siwage Dharma Negara, an economist at Singapore’s ISEAS Yusof Ishak Institute, told The Jakarta Post on Monday.
He added that Indonesian nickel products related to Chinese investment would “certainly be affected” should the US-China trade war intensify due to higher tariffs imposed by the US on Chinese products.
Indonesia exports most of its nickel to China but sees the US, home to electric vehicle (EV) giant Tesla, as a promising alternative market for the key battery material.
However, shipments to the country run up against the US Inflation Reduction Act (IRA), which grants preference, and generous subsidies, to EV producers and suppliers based in the US or in countries with which the US has FTAs, such as Canada, the biggest supplier of nickel to the US.
Furthermore, Siwage noted that Tesla had “started developing EV battery technologies that would not depend too much on nickel”.
