Recent reports that the United States has offered to lower tariffs on Indonesian goods — from a threatened 32% to 19% — only if Jakarta agrees to purchase US-made maritime surveillance drones and “readjust” its South China Sea policy mark a troubling escalation in economic diplomacy.
According to a government document seen by The Straits Times, Washington’s demands also extend to expanded security cooperation, limits on Chinese technology, and prior consultation with the US on Indonesia’s future digital trade agreements.
These conditions should give Indonesia pause. Accepting them would not merely complicate trade negotiations; it would jeopardize Indonesia’s strategic autonomy, strain relations with China, and risk provoking greater instability in the South China Sea — precisely the outcome Indonesia has long sought to avoid.
Indonesia’s rise as a regional power has been built on a clear principle: bebas aktif, or an independent and active foreign policy. This doctrine has allowed Jakarta to engage major powers without being subsumed by their rivalries.
It has also enabled Indonesia to act as a stabilizing force in Southeast Asia, promoting dialogue over confrontation even as competition between Washington and Beijing intensifies.
The US demands outlined in the leaked document, however, blur the line between trade and security in ways that undermine this approach. Conditioning tariff relief on the purchase of American military hardware and on changes to Indonesia’s South China Sea posture intrudes directly into matters of sovereignty.
Requests to restrict Chinese software or to consult Washington before signing digital trade agreements with third parties further constrain Indonesia’s freedom to make independent economic and technological choices.
Such concessions would have immediate consequences for Indonesia’s relationship with China. Beijing is one of Jakarta’s most important economic partners, deeply embedded in Indonesian trade, investment and infrastructure development.
While Indonesia does not recognize China’s sweeping maritime claims, it has managed tensions through calibrated diplomacy — asserting its rights in the North Natuna Sea without allowing disputes to spiral into open confrontation.
A visible alignment with US security demands would likely alter Beijing’s calculus. China could respond not only economically, through reduced investment or trade pressure, but also strategically.
One real risk is that China could increase its assertiveness — or even aggression — in the South China Sea to signal that Indonesia’s shift carries consequences.
More frequent patrols, tougher maritime encounters, or heightened pressure around contested waters would place Indonesia in a more precarious security environment, eroding the very stability Jakarta seeks to preserve.
Ironically, the US proposal risks producing the opposite of its stated goal. Rather than enhancing Indonesia’s maritime security, it could invite sharper Chinese reactions and increase the likelihood of miscalculation at sea. Indonesia would find itself more exposed, not less, to great-power rivalry.
The regional implications are equally serious. Southeast Asia’s fragile equilibrium depends on major states like Indonesia resisting pressure to choose sides.
If Jakarta accepts security-linked trade conditions from Washington, it could set a precedent that fractures ASEAN unity.
Other countries may feel compelled to follow suit — or, conversely, to move closer to China as a counterweight. Either path would deepen polarization and make the South China Sea more volatile.
Indonesia does have alternatives. Trade negotiations with the US can proceed through conventional channels: improved market access, industrial cooperation, supply-chain resilience and reductions in non-tariff barriers.
These approaches would address legitimate economic concerns without entangling Indonesia in strategic commitments that compromise its independence.
This is not an argument against close relations with the US. A strong US-Indonesia partnership remains vital, particularly in areas such as climate change, economic development, and regional diplomacy.
But partnership must rest on mutual respect, not coercion. Using tariffs to extract geopolitical concessions risks alienating Indonesia and undermining America’s own long-term interests in Southeast Asia.
For Indonesia, the choice is stark. Short-term tariff relief may be tempting, but the long-term costs — to its relations with China, to regional stability, and to its own strategic autonomy — are far greater.
By standing firm, Jakarta can reinforce a message it has long championed: Indonesia will engage all powers, but it will not be drawn into anyone else’s rivalry.
In an era of intensifying great-power competition, Indonesia’s independence is its greatest asset. Sacrificing that independence would not only weaken Indonesia’s position — it could make the South China Sea an even more dangerous place for everyone.
Muhammad Zulfikar Rakhmat is director of the China-Indonesia Desk at the Jakarta-based Center of Economic and Law Studies (CELIOS) independent research institute.