US-Indonesia Trade: Asymmetries & Impact

ON February 2026, the governments of Indonesia and the United States signed Agreement Between the United States of America and the Republic of Indonesia on Reciprocal Trade.

The word “reciprocal” in the title of this agreement promises equality and mutual benefit.

However, after reading the entire 45 page document carefully, what appears is not reciprocity, but rather a long list of unilateral obligations that Indonesia must fulfill in return for reducing US tariffs from 32 percent to a maximum of 19 percent.

This agreement deserves much more serious public attention because its implications go beyond mere tariff figures and trade quotas.

Striking Asymmetry

The first thing that is striking about the structure of this agreement is the very unequal distribution of obligations.

Almost all articles use the formulation “Indonesia shall”—Indonesia must do this and that.

Also read: Testing the Constitutional Validity of the Prabowo-Trump Trade Agreement

Meanwhile, US obligations are formulated in much looser language: “the United States shall work with”, “the United States may”, or “the United States commits to establishing a mechanism”.

In international treaty law, the distinction between “shall” and “may” is not just a game of semantics—it is a fundamental difference in the degree of legal binding.

In return for reducing tariffs, Indonesia was asked to carry out an extraordinarily long list of obligations: open markets for US agricultural products, remove local content requirements, accept FDA standards in lieu of BPOM supervision, exempt US products from halal certification, align sanctions and export control policies with the US, buy US $33 billion worth of US products, and prohibit new trade agreements with countries that “threaten essential US interests.”

Meanwhile, concrete US commitments are minimal: only reciprocal tariff reductions and a promise to “consider” financing support through EXIM Bank and DFC.

There are no exact numbers, no deadlines, no binding enforcement mechanisms for the US.

Pledged Regulatory Sovereignty

The most problematic aspect of this agreement is the erosion of Indonesia’s regulatory sovereignty in almost all sectors.

In the pharmaceutical and medical device sector, Indonesia must accept FDA approval as sufficient evidence that US products meet Indonesian requirements—effectively delegating some of BPOM’s oversight functions to foreign agencies.

In terms of food safety, Indonesia must recognize that the US food safety system meets Indonesian standards, without the need for an independent assessment.

The most socio-politically sensitive is the provision regarding halal certification. This agreement requires Indonesia to exempt US manufactured products—including cosmetics and medical devices—from halal certification and labeling.