Jakarta. The Reciprocal Trade Agreement (RTA) concluded on Feb. 19 between President Prabowo Subianto and President Donald Trump was widely viewed as an important step toward strengthening Indonesia’s access to the United States market. Yet within hours of its announcement, the landscape shifted. The Supreme Court of the United States (SCOTUS) declared previously imposed high tariffs unconstitutional. President Trump responded by introducing what he termed a “global tariff,” initially set at 10 percent and later raised to 15 percent.

This near-simultaneous sequence of events was more than a policy episode. It became a test of treaty consistency and the stability of economic expectations. The implications extend beyond Indonesia to all US trading partners. For Indonesia, however, the core question is how the newly announced global tariff interacts with the recently negotiated bilateral arrangement. Does it establish a new baseline? Do negotiated preferences still apply? Or does it fundamentally alter the economic incentives embedded in the RTA?

In any treaty-making process, clarity over negotiated outcomes is essential. When a material element of an agreement changes — in this case through a unilateral policy adjustment — it would be unusual for the other party to proceed to ratification without first seeking clarification, or even reconsideration. As negotiators often say, nothing is agreed until everything is agreed.

In modern international trade, legal certainty is not an abstract principle but the foundation of investment decisions and long-term business planning. Companies assess not only tariff levels but also regulatory stability. Sudden policy shifts — even if domestically lawful — can alter risk perceptions and increase uncertainty premiums.

Preliminary analysis by Global Trade Alert suggests that the impact of a global tariff would be far from uniform. Using trade-weighted average tariffs — calculated on the basis of actual import volumes across products — provides a more realistic measure than simple averages. This method assigns greater weight to products traded in substantial quantities, offering a clearer picture of effective tariff exposure.

Under this methodology, estimates by Global Trade Alert place Indonesia’s negotiated effective tariff at around 19 percent. Vietnam and Malaysia fall within the 19–20 percent range, while India — outside ASEAN — stands at roughly 18 percent under its interim arrangement with the United States. Against this backdrop, a universal 15 percent global tariff inevitably invites comparison. The central question is straightforward: Does a negotiated preference retain the same economic value when the baseline rate shifts downward?

The answer depends on each country’s export structure. Economies that previously faced relatively high effective tariffs may appear better positioned under a uniform global rate. Conversely, those that enjoyed lower rates could see their relative advantage eroded. Within ASEAN — where export profiles range from commodity-based shipments to higher value-added manufacturing — the impact cannot be generalized. Policy responses, accordingly, cannot be uniform.

For Indonesia, the immediate step is not confrontation but clarification. The government should formally seek confirmation on how the global tariff is to be treated within the framework of the signed bilateral agreement and whether room remains for additional preferences — particularly for tropical products not produced in the United States. Such clarification is standard practice in trade diplomacy and essential to preserving the consistency of negotiated outcomes.

If the global tariff materially alters the economic value of agreed concessions, a measured review of the arrangement should not be considered extraordinary. In international treaty practice, horizontal and non-discriminatory domestic policy changes can affect the balance of negotiated outcomes. What ultimately matters is transparency, sound economic reasoning, and the preservation of long-term bilateral credibility.

Beyond the bilateral dimension lies an equally important issue: investor confidence. Recent assessments of Indonesia’s economic outlook — including commentary from Moody’s and cautionary views expressed by Morgan Stanley — underscore that perceptions of policy consistency and reform direction matter greatly. Such evaluations are rarely driven by a single policy decision but by broader signals of institutional reliability.

In an environment of rapid external change, domestic policy stability becomes a critical differentiator. Investors tend to grow more sensitive to regulatory consistency as global uncertainty rises. While Indonesia cannot control external volatility, it retains full control over the quality of its policy response and the predictability of its regulatory framework. For this reason, the RTA and global tariff episode should be viewed as a reform moment. Regulatory transparency — including the processes by which regulations are drafted — investment certainty, and governance efficiency are not merely demands of trading partners; they are structural necessities for Indonesia’s long-term competitiveness. Reform is not a diplomatic concession. It is the foundation of sustainable growth.

With or without the RTA — and alongside the various FTAs and CEPAs Indonesia has concluded — the country requires continuous improvement in regulatory simplification, industrial policy coherence, and institutional strengthening. In a world where trade policy can shift within hours, competitive advantage is determined less by tariff margins than by policy credibility and institutional quality.

This context also resonates ahead of the 14th Ministerial Conference of the World Trade Organization in Yaoundé, Cameroon, on March 26–29, 2026. As reform of the multilateral trading system moves to the forefront, adherence to principles of non-discrimination, transparency, and legal certainty becomes ever more critical. Indonesia, like many developing economies, has a direct interest in ensuring that shifts in major economies’ domestic policies do not erode confidence in the multilateral framework on which smaller and medium-sized economies depend.

The appropriate response, therefore, is neither emotional nor reactive but calculated and strategic: clarification of the global tariff’s implications, readiness to revisit the agreement if necessary, and acceleration of domestic reforms that are already overdue. International trade has always involved negotiation and compromise. The countries that endure and prosper are those that remain consistent at home while adaptable abroad.

Ultimately, certainty and trust are the two essential currencies of the global economy. Without them, even preferential tariffs cannot guarantee sustained investment, trade flows, or long-term growth. Indonesia’s response should rest on a simple yet fundamental principle: uphold the consistency of agreements, strengthen policy credibility, and pursue reforms in the national interest.

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Iman Pambagyo is the Trade Ministry’s Director General of International Trade Negotiations (2012-2014, 2016-2020) and Indonesia’s Ambassador to the WTO (2014-2015).

The views expressed in this article are those of the author.