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View all search resultsTrump trade deal may present geopolitical challenges for Indonesia
Analysts have warned that the 19-percent trade tariff deal with the United States may make Indonesia dependent on the country while unsettling many alternative trade partners.
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A vehicle passes stacks of cargo containers on July 7 at the Jakarta International Container Terminal at the Tanjung Priok Port in Jakarta. (AFP/Bay Ismoyo)
A celebratory and hopeful tone has been raised over the United States’ decision to lower Indonesia’s trade tariff to 19 percent, but analysts have warned that the country may still face tricky situations ahead as nonaligned Jakarta works to rebalance ties with other key economic partners.
Indonesia’s ambition to be less reliant on volatile superpowers could be challenged by its new obligation to purchase more American goods, observers have added, who also warned that the decision to significantly lower trade barriers for Washington may ruffle feathers among other key partners if not managed properly.
Countries around the world are wrapping up their trade negotiations with Trump ahead of his Aug. 1 deadline for enforcing his so-called “reciprocal tariff” policy. Some have finalized the trade agreement in the past weeks, including the European Union, the United Kingdom, Japan and Vietnam.
On July 15, US President Donald Trump announced a 19-percent tariff for Indonesia, significantly below the 32 percent level he threatened earlier. As part of the deal, Trump added that Indonesia agreed to purchase US$15 billion in oil and gas, $4.5 billion in agricultural products and 50 Boeing jets.
Centre for Strategic and International Studies (CSIS) economist Dandy Rafitrandi suggested that the geopolitical repercussions have already appeared.
“I think, [...] we can already tell that the [deal] carries quite a heavy weight because of its non-optional nature and other consequences,” he told The Jakarta Post on Wednesday.
