On February 19, Indonesian President Prabowo Subianto is expected to travel to Washington to attend the inaugural Board of Peace meeting and sign an Indonesia-United States Agreement on Reciprocal Tariffs, or ART.
If he does, Indonesia will not be signing a routine trade deal. It will be entering a new model of agreement that blends tariff relief, foreign policy alignment and sweeping enforcement powers in ways that deserve far closer scrutiny.
Recent ARTs signed by other countries have followed a clear template. The US demands binding and enforceable commitments across trade, regulatory policy and strategic sectors. In return, Washington offers partial relief from its own “reciprocal” tariffs on selected products, while retaining most other tariffs already in place.
The obligations fall overwhelmingly on the non-US country, while the US obligation is limited and conditional.
This asymmetry has generated strong backlash. In Malaysia, the Agreement on Reciprocal Trade sparked one of the most intense sovereignty debates in recent history. More than 140 police reports were lodged demanding an investigation.
Former Prime Minister Mahathir Mohamad declared that the agreement put Malaysia “under the control of the US” and called it treason. He filed a police report citing sections 124B, 124C and 124K of the penal code, provisions dealing with sabotage and activities detrimental to parliamentary democracy.
Mahathir warned that clauses concerning exports of rare earth elements and other critical minerals eliminated Malaysia’s power to determine foreign policy, economic policy and the use of national strategic resources independently.
Another former prime minister, Muhyiddin Yassin, said that after more than 60 years of independence, Malaysia faced an extraordinary situation in which sovereignty might be compromised by negligence in negotiations.
Former attorney general Tommy Thomas argued that even under the British empire, there had not been such a degree of direct control over Malaya’s economy. He described the US trade treaty as neo-imperialism and the worst deal since independence.
Former trade minister Azmin Ali called implementation a surrender of sovereignty, neutrality and economic future. Retired general Borhan Ahmad said Malaysia had “surrendered our sovereignty and integrity to a foreign power” and warned against recolonization through a lopsided deal. He and other former army personnel planned to bring the matter before the Conference of Rulers.
The political pressure forced a response. Malaysian trade minister, Johari Ghani, appointed in December 2025 after the ART was signed, announced that the agreement was under comprehensive review. On January 27, he told Parliament that the ART had not yet entered into force.
The government, through the Ministry of Investment, Trade and Industry, was conducting a full assessment of the market access gains from tariff reductions and examining provisions that might affect sovereignty and policy space in trade, industrial development and regulation.
The review would ensure alignment with Malaysia’s neutrality and non-alignment, and with commitments under the United Nations Charter, the World Trade Organization and existing free trade agreements. Any provision found unfair, he said, must be renegotiated.
Malaysia’s case highlights what is at stake. First, ARTs require partner countries to cooperate with the US to ensure their companies comply with US sanctions. Washington’s sanctions list is ever-expanding.
It has recently included the UN Special Rapporteur on the Occupied Palestinian Territories Francesca Albanese, International Criminal Court prosecutor Karim Khan, nine ICC judges involved in investigations concerning Israeli nationals and US personnel in Afghanistan, two deputy prosecutors, nongovernmental organizations such as Al Haq, the Al Mezan Center for Human Rights and the Palestinian Centre for Human Rights and companies linked to Iran.
Agreeing to enforce US sanctions policy risks entangling domestic firms in geopolitical disputes that may not reflect Indonesia’s own positions.
Second, these agreements generally prohibit the partner from entering into a free trade agreement with countries that the US considers to undermine the ART, threaten security, jeopardize essential US interests or qualify as non-market economies.
For Indonesia, this raises immediate questions. Jakarta signed a trade agreement with Iran in 2023. If Indonesia accepts similar language, would it retain the freedom to ratify and implement that agreement?
Third, enforcement is heavily tilted. If the US determines that a partner has failed to comply to its satisfaction, it can restore higher reciprocal tariffs, reportedly up to 32% as announced on April 2, 2025.
It does not need to secure a ruling from an agreed tribunal, as is common with most free trade agreements. Compliance becomes a unilateral US judgment. For Indonesia, that would mean Washington decides whether Jakarta has done enough.
The economic calculus also demands scrutiny. The additional reciprocal tariff imposed by the US on Indonesia has already been lowered to 19%. At most, Indonesia may receive exemptions from that additional tariff for selected products if it signs the ART. Yet the value of preferential access may be limited.
Facing domestic backlash over inflation linked to tariffs, Washington has already exempted tropical products such as coffee, tea, bananas and pineapples for all countries, including Indonesia. Further global exemptions are reportedly under consideration. The margin of advantage could narrow quickly.
There are broader risks. A lopsided ART could widen Indonesia’s overall trade deficit if market opening leads to increased US imports without a proportional export surge. A larger deficit can pressure the rupiah and complicate macroeconomic stability.
If energy purchases from the US expand under the deal, Indonesia’s oil and gas deficit could increase. If commitments require purchases of US Boeing aircraft, critics may question both fiscal prudence and safety reputation amid recent accident controversies.
The provisions on critical minerals are especially sensitive. The US seeks direct access to strategic resources to secure supply chains. Indonesia, however, has spent more than a decade building downstream processing capacity, supported significantly by Chinese investment in smelters and industrial parks.
Opening critical minerals under terms that restrict export controls or policy flexibility could undermine the downstreaming strategy designed to move Indonesia up the value chain. It could also create friction with existing contracts and discourage Chinese investors who have anchored much of the sector’s growth.
Other countries have hesitated. The European Union, the United Kingdom, Japan, South Korea, Thailand and Vietnam have remained at the stage of short framework statements rather than binding ART treaties. Pakistan and the Philippines have not agreed to joint statements after their reciprocal tariffs were lowered to 19% in July 2025 and appear to be waiting.
The US Supreme Court is widely expected to rule in the coming months on whether President Trump’s tariffs comply with US law. If the court finds them unlawful, the leverage underpinning these agreements would weaken sharply and immediately.
Indonesia’s foreign policy has long rested on independence and active engagement. Before signing a far-reaching ART, Jakarta should carefully weigh Malaysia’s experience. Tariff relief on a limited set of products may not justify constraints on sanctions policy, trade autonomy and strategic resource management.
Sovereignty, once conceded in binding treaty language, is difficult to restore.
Bhima Yudhistira Adhinegara is executive director of the Jakarta-based Center of Economic and Law Studies (CELIOS) independent research institute. Muhammad Zulfikar Rakhmat is director of the institute’s China-Indonesia Desk.