Jakarta. A near-final trade pact between Indonesia and the United States is raising red flags among economists, who warn that the agreement could weaken Jakarta’s geopolitical footing while offering limited economic gain.

“Looking at [US President] Donald Trump’s past tariff wars, especially with China in 2018, many of the implementation rules remain unresolved to this day,” economist Wijayanto Samirin of Paramadina University said at a discussion hosted by B-Universe Media Holding in PIK2, Banten, on Wednesday.

He warned that Trump’s approach often creates disruption without clear follow-through, raising the risk that agreements could be left in limbo if a future US administration changes course. “My strategy would be to stay flexible — don’t become an enemy,” Wijayanto said.

Indonesia is in the final stage of negotiations with Washington after Trump last April imposed 32% tariffs on Indonesian goods, citing concerns over the US trade deficit, which totaled $17.9 billion in 2024. After months of talks, Trump agreed in July to cut the tariffs to 19%, and Indonesia is negotiating a further reduction — effective since last August — to zero for palm oil, which cannot be grown naturally in the United States.

In exchange for lower tariffs, Indonesia — the world’s largest palm oil producer — agreed to eliminate nearly all import duties on US industrial and agricultural products and committed to $4.5 billion in American agricultural imports, according to a joint statement. Jakarta also pledged to address barriers to digital trade and provide cross-border personal data transfers.

President Prabowo Subianto is expected to travel to Washington later this month to sign the agreement.

Indonesia’s chief negotiator, Chief Economic Affairs Minister Airlangga Hartarto, has rejected claims that negotiations were stalled by controversial “poison pill” clauses. The provisions would allow Washington to reimpose higher tariffs if a partner signs trade deals deemed to threaten US essential interests or requires partners to mirror US import restrictions imposed on other countries.

Such clauses have sparked controversy in the region. Malaysia, a fellow ASEAN member and major palm oil exporter, agreed to similar loyalty provisions in exchange for zero tariffs on selected products, including palm oil. Critics argue the Malaysian deal undermines economic sovereignty and is aimed at curbing China’s influence in Southeast Asia.

Not all economists share Wijayanto’s cautiously optimistic view. Lili Yan Ing, secretary-general of the International Economic Association, said the deal is “deeply disappointing” for Indonesia and weakens its geopolitical position.

She warned that while the headline tariff cut to 19% appears favorable, key sectors remain exposed. US executive orders still impose tariffs of up to 25% on pharmaceuticals, semiconductors, aluminum, textiles, and garments, with additional provisions allowing duties to rise further on national security grounds.

“Indonesia is tying itself to an agreement with no clear endpoint,” Lili said, questioning why Jakarta would accept pressure from what she described as an unpredictable US administration. She added that US companies already earn substantial profits in Indonesia.

“If the US truly sees Indonesia as a partner, it would not apply tariffs and pressure like this,” she concluded.

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