THE United States Supreme Court has ruled against the tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
The decision came just one day after the signing of the Indonesia-US Agreement on Reciprocal Trade (ART).
The immediate question, therefore, is what this means for the deal.
The argument here is that the court’s decision does not kill the bilateral trade arrangement.
If anything, it clarifies the terrain.
The ART operates within an executive-centered trade regime whose stability is inherently contingent, and Indonesia enters the regime with structural asymmetries of its own.
There are three reasons for this assessment.
First, the court’s decision addresses tariffs imposed under IEEPA authority alone.
The Indonesia-US ART, however, is not confined to that instrument.
It extends to non-tariff matters such as investment cooperation and supply chain coordination.
Second, even on tariffs, the legal foundation is not confined to IEEPA.
Sectoral measures rest on Section 232 of the Trade Expansion Act of 1962 under the national security exception, which grants wide executive discretion.
Third, political intent reinforces this reality.
On the same day, US President Donald Trump issued three executive orders.
One of them invoked Section 122 of the Trade Act of 1974 through a proclamation framed as imposing a temporary import surcharge to address international payments concerns.
The Trump administration has also indicated that the current 10% surcharge will be increased to 15%, the statutory ceiling under Section 122.
Though such escalation may not endure if market and consumer pressures mount, the broader signal is clear: Executive trade authority can shift rather than recede.
For Indonesia, the immediate effects are uneven.
Products that were previously subjected to an additional 19% tariff under IEEPA revert to the Most Favored Nation (MFN) rate.
The reciprocal layer disappears.
Yet once Section 122 is activated, a 10% ad valorem surcharge may apply for up to 150 days.
The proclamation provides exemptions covering certain critical minerals, energy products, pharmaceutical ingredients, aerospace items, information materials and textile and apparel goods from specific Central American countries under their free trade arrangement with Washington.
Indonesian products do not benefit uniformly from these carveouts.
Some electronics and selected agricultural commodities that fall within the exemption list remain at MFN.
Other goods face MFN plus 10% during the surcharge window.
Textiles are more exposed.
For a labour-intensive sector already under strain, MFN plus 10% is not marginal. It compounds existing competitiveness pressures.
Timing introduces another layer of uncertainty.
The bilateral trade deal will only enter into force after both parties complete their domestic legal procedures, a process that may extend to the full 90 days permitted under the agreement.
The Section 122 surcharge may remain in effect for up to 150 days from proclamation.
This creates a window of overlap.
Indonesia exports could face MFN plus 10% even after the agreement is signed but before it becomes operational.
If the surcharge lapses before entry into force, tariffs revert to the MFN in the interim. If the trade deal becomes effective while the surcharge remains active, concessions may exist formally while emergency measures continue in practice.
The question should be asked, therefore, is not whether the US-Indonesia deal survives the ruling.
It does.
The deeper question concerns the environment in which it now operates.
Trade authority in the United States can migrate from IEEPA to Section 122 and potentially to Section 232 within weeks.
The durability of the US-Indonesia deal depends not only on executive commitments, but also on judicial interpretation, congressional dynamics and electoral cycles.
The ART operates in a legal environment that is elastic rather than fully institutionalised like a traditional free trade agreement.
The court’s ruling and the subsequent executive actions should also serve as a wake-up call for Jakarta.
Indonesia enters this fluid setting with a concentrated trade structure.
According to Trade Map data in 2024, China accounted for more than 30% of Indonesia’s imports and over 20% of its exports.
By contrast, Singapore as the second largest import partner accounted for only about 9%, while the United States as the second largest export destination accounted for about 10%.
In processed nickel and related sectors, concentration is even stronger.
In a normal day, it does not equate to alignment.
However, in an era of great power rivalry, it shapes perception and bargaining leverage.
The ART may rebalance Indonesia’s external economic equation through expanded US participation.
But the risk lies in substitution.
Diversification should narrow structural dependence, not transfer it from one partner to another.
If complete reversal of the ART is improbable, discipline in the implementation is required.
Provisions that strengthen strategic diversification, serve the broader public interests and reinforce domestic competitiveness should advance.
Clauses that excessively constrain foreign policy space should be managed within available legal channels. Institutional coherence is critical.
The Foreign Ministry must be granted with both authority and resources to coordinate the economic security dimensions of the agreement, as the ART affects not only bilateral trade with the United States but also Indonesia’s relations with Asean partners, China and other comprehensive economic partners.
Without structured coordination, external volatility risks translating into deepening internal fragmentation.
As the uncertainty deepens ahead of the United States midterm elections, Indonesia must clarify the status of non-IEEPA tariff provisions, reassess sectors unevenly affected by the court’s ruling, and seek compensations whenever possible.
Where earlier advantages have narrowed, recalibration will be necessary.
For greater durability, Jakarta needs to explore pathways toward a more institutionalised trade framework with Washington, while preparing a US Plus One contingency strategy and articulating a clearer vision of its role within the evolving international economic order.
In a landscape defined by executive elasticity and great power rivalry, Indonesia’s resilience will depend not only on safeguarding the remaining space, but on shaping the next equilibrium. — The Jakarta Post/ANN
Muhammad Habib Abiyan Dzakwan is a researcher at the Department of International Relations, CSIS Indonesia. The views expressed here are the writer’s own.
