Jakarta. The US Supreme Court’s decision to invalidate the original legal basis of President Donald Trump’s tariff policy against several countries, including Indonesia, has injected fresh uncertainty into bilateral trade relations.

Amid the uncertain legal landscape, Indonesia is seen as relatively better positioned, having entered negotiations earlier, according to Fitra Faisal Hastiadi of the Government Communications Agency (Bakom RI).

Fitra said that after the Supreme Court struck down the tariff policy based on the International Emergency Economic Powers Act (IEEPA), Trump swiftly turned to another legal instrument: Section 122 of the Trade Act of 1974.

“When the Supreme Court ruled it out, President Trump immediately exercised the 1974 Trade Act. Why can Section 122 be implemented immediately? Because it does not require a federal investigation,” Fitra said.

In response to the Supreme Court ruling, Trump imposed a temporary 10% tariff on all global imports. He had threatened to bring in a 15% rate, but the lower rate took effect on Tuesday. It will remain in place for 150 days, at which point Trump is expected to consult Congress on any extension.

What will happen to the 19% tariff under the Agreement on Reciprocal Tariff (ART) scheme, which was signed on Friday just hours before the Supreme Court ruling?

According to Fitra, the status of the 19% tariff is now in a legal gray area, as its original basis—IEEPA, has been annulled. However, another legal view suggests that once an international agreement has been signed, it may still proceed.

The complication lies in Article 7 of the Agreement on Reciprocal Tariff, which requires domestic ratification by both parties. In Indonesia, this would involve deliberation with the House of Representatives (DPR), while in the US, it must pass through Congress.

“So the probability of it not taking effect is quite significant,” he said.

For now, the tariff under Section 122 remains the most certain framework, while the 19% rate hinges on political dynamics and ratification processes in both countries.

Beyond Section 122, Trump also retains access to more aggressive legal tools under the Trade Act of 1974, namely Sections 232 and 301.

Section 232 allows the US government to impose tariffs without limits if deemed necessary for national security, including in the context of trade deficits. However, it requires a federal investigation by the Department of Commerce. “The tariff is limitless. That means if this is enforced, there may be no cap,” Fitra said.

Meanwhile, Section 301 may be invoked if the US believes its businesses are being discriminated against by another country. Investigations are conducted by the US Trade Representative, and tariffs imposed can last up to four years and be extended without a nominal limit.

Both instruments, he said, could effectively restore a reciprocal tariff scheme without clear caps or duration.

In that context, Fitra argued that Indonesia’s early move to negotiate has worked to its advantage. “It is more beneficial that we negotiate early. If we had not negotiated, we would be subject to the potential imposition of tariffs that could be even much higher,” he said.

Separate from the general tariff framework, certain products have been granted a 0% tariff exemption. Fitra clarified that this policy stems from a different executive order, distinct from the Agreement on Reciprocal Tariff. “This 0% tariff exemption, although its schedule still refers to the Agreement on Reciprocal Tariff, may indeed be excluded,” he said.

In other words, the opportunity to maintain a 0% tariff remains open, depending on how the executive order is implemented and on subsequent policy dynamics in Washington.

Another emerging issue is concern from China over Article 5.1 of the agreement. The clause allows Indonesia to adopt measures imposed by the US against specific countries—including tariffs, quotas, or sanctions, following notification from Washington.

According to Fitra, the main objective of the clause is to prevent transshipment practices, where goods from sanctioned countries are rerouted through third countries to avoid higher tariffs.

However, he stressed that Indonesia retains a strong escape clause. “In Articles 5.2 or 5.3, it is subject to national interest. We have an escape clause, as long as it does not disrupt our national interest,” he said.

Indonesia’s national interest, Fitra added, includes maintaining good relations with China and other trading partners. As such, implementation of the clause does not automatically follow US policy and may be renegotiated.

Additionally, a Council on Trade and Investment will be established as a consultation forum in the event of trade imbalances or policies deemed detrimental to Indonesia’s national interest. “Matters considered disruptive to our national interest can be discussed in that forum and renegotiated,” he said.

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