Jakarta. Indonesian businesses are keeping their fingers crossed that Jakarta will not fall into the same trap as Malaysia did in its US tariff negotiations. 

Jakarta is still trying to bring down Washington’s import tax on strategic commodities like palm oil to zero as negotiations for the trade agreement continue. Malaysia -- Indonesia’s top rival in the palm oil trade -- already secured the tariff exemptions on the agrifood commodity in late October. However, the Malaysian government had come under fire for allegedly surrendering the country’s economic sovereignty as the pact obliges Kuala Lumpur to mirror US trade sanctions, on top of making sure that whatever new deal it signs must not “jeopardize” Washington's interests. The Indonesian Employers Association (Apindo) has warned President Prabowo Subianto to be extra careful before inking any document.

“Malaysia has fallen into a trap. … We at Apindo have urged the government to simply focus on bilateral trade and investment in the negotiations. From the very beginning, the reciprocal tariffs stemmed from [US] deficits,” Apindo’s head for trade affairs Anne Patricia told reporters in Jakarta on Monday.

“Sovereignty is not something that we can compromise. … We must not get caught in handshake traps. This is about trade and investment. It has nothing to do with politics,” Anne said.

US President Donald Trump has threatenef to reimpose sanctions on Malaysia if Kuala Lumpur decides to sign a new deal that puts Washington’s “essential interests” at risk, according to their signed document. The text does not explicitly mention China, but analysts have interpreted the wording as Trump’s attempt to force Malaysia to pick a side in the major power rivalry. The pact includes an alignment clause that requires Malaysia to mirror Trump’s trade restrictions on other countries, be it tariffs, quotas, and prohibitions.

The Financial Times recently reported that Indonesia has resisted Washington’s requests to agree to the poison pill clause. Indonesia’s chief negotiator Airlangga Hartarto denied that this poison pill clause was what had delayed Jakarta’s negotiations.

“There is no such thing. The [US] trade negotiations with Malaysia and those of Indonesia are different,” Airlangga said, when asked about the loyalty provisions. 

Negotiations once got stuck because of the 43-day-long government shutdown. Indonesia is hoping to clinch the US deal within this year. Both nations had declared a framework agreement back in July, which saw Trump slashing the reciprocal tariffs on Indonesian goods from 32 percent to 19 percent. The accord also binds Jakarta to scrapping virtually all tariffs on American industrial and agricultural products.

Indonesia's foreign policy under Prabowo sees the country wanting to befriend everyone. Jakarta also continues to engage in trade with both the US and China. The Central Statistics Agency data showed that Indonesia recorded $17.40 billion in non-oil and gas surplus when doing business with the US in January-October 2025. The Southeast Asian country registered a $17.74 billion trade imbalance with China over the same ten-month period. 

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