Jakarta Globe - 07 January 2026
Indonesia-US trade deal: analyst warns of retaliation from China, EU
By Jayanty Nada Shofa
A senior economist has warned Indonesia of possible retaliation from other countries like China and the European Union, or EU, if Jakarta pushes ahead with the tariff deal with the US.
Indonesia and the US are now at the final stage of their reciprocal trade agreement negotiations. The signing is scheduled for later this month, with President Prabowo Subianto set to fly to the White House to give his signature. The speedy negotiations had seen Jakarta granting US businesses special treatment, ranging from 0% tariffs, access to critical minerals, to $15 billion worth of energy import pledges. On the other hand, Indonesian exports are subject to a 19% tariff, except for commodities not naturally available in the US, such as palm oil and cocoa.
Yose Rizal Damuri, the executive director of the think-tank CSIS, told reporters on Wednesday that the one-sided deal might upset other countries.
“[Indonesia] will face pressure from other countries that wish to have the same thing that the US gets. … China might use this as a basis to demand the same treatment, or maybe the EU. … Remember it took us almost 10 years to have a free trade agreement with the EU, but the US managed to secure better terms in just 6 months,” Yose said.
“Such cases can even lead to retaliation. So countries are not only demanding the same treatment, but could even retaliate if they feel the concessions we make for Washington put them at a disadvantage. This will disrupt our trade stability,” Yose stated.
China is Indonesia’s biggest trading partner, although Jakarta ran a $19.28 billion non-oil and gas deficit in 2025 as of November, official statistics showed. Their bilateral export activities can enjoy zero tariffs under the Regional Comprehensive Economic Partnership (RCEP). Beijing is also a major investor in Southeast Asia’s biggest economy.
Indonesia’s annual non-oil surplus with the EU totaled $6.55 billion as of November 2025. Under an upcoming free trade agreement, Indonesia and the EU will remove virtually all tariffs on each other’s goods, possibly starting next year.
Yose also warned that the US deal was “far from reciprocal” as Indonesia’s key manufactured exports like footwear and textiles are still subject to the 19% import tax. Business lobby group Apindo, too, is keeping its fingers crossed that manufactured goods could sooner or later enter the American market tariff-free.
The Donald Trump administration is currently busy with its capture of Venezuela’s now-ousted leader Nicolas Maduro. State Secretary Prasetyo Hadi has said that the Venezuela crisis would not affect the US tariff negotiations, and that everything would “remain on schedule”.
Indonesia has called on everyone to pursue dialogue following US strike on Venezuela. However, Former Deputy Foreign Minister Dino Patti Djalal is unhappy with Jakarta’s official statement, slamming the wording as being “very standard”. Jakarta, too, shied away from directly condemning Trump.
“Partnering with the US, or any country, must not make Indonesia a submissive country that sacrifices principles,” Dino said.
