Coordinating Minister Airlangga Addresses 22 Doubts on RI–US Reciprocal Tariffs, Here Are the Details

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JAKARTA, investortrust.id – Coordinating Minister for Economic Affairs Airlangga Hartarto addressed various questions and uncertainties surrounding the Agreement on Reciprocal Trade (ART) between Indonesia and the United States. A total of 22 questions were answered by Airlangga to dispel public doubts regarding the benefits of the ART for Indonesia.

The responses were conveyed to ensure the public shares the government’s understanding that the ART benefits Indonesia.

Below are the 22 questions answered by Minister Airlangga through the spokesperson of the Coordinating Ministry for Economic Affairs, Haryo Limanseto, in an official press release.

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1. What underpinned the Indonesian government’s decision to negotiate and reach an agreement with the US government on reciprocal tariffs?

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On April 2, 2025, unilaterally, the US government imposed reciprocal tariffs on countries contributing to the US trade deficit, including Indonesia, which was subject to a 32% tariff (US data: a US$ 19.3 billion deficit in 2024).

The government viewed negotiations as necessary to safeguard the competitiveness of export products and the livelihoods of around 4–5 million direct workers in labor-intensive industrial sectors affected by the tariff. The government chose the diplomatic path rather than retaliation that could further harm the national economy.

The government conducted intensive negotiations with the US until the reciprocal tariff was reduced from 32% to 19% on July 15, 2025, as stated in the Joint Statement on the Framework of the Agreement on Reciprocal Trade (ART), which noted that the US and Indonesian governments would immediately discuss and finalize the ART.

On February 19, 2026, the President of Indonesia and the President of the United States signed the ART, stipulating the agreed reciprocal tariff rates and tariff exemptions for Indonesia’s leading products, such as palm oil, cocoa, coffee, rubber, and textiles entering the US market.

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2. When does the ART take effect?

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This agreement will enter into force 90 days after both countries provide written notification stating that the legal procedures in their respective jurisdictions (consultation with relevant institutions and ratification) have been completed.

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3. Can the ART be evaluated and amended?

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This agreement may be evaluated and amended at any time upon written request and approval from both parties.

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4. Beyond the reduction in reciprocal tariff rates, what benefits does Indonesia obtain from the ART?

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Increased competitiveness of Indonesian export products.

Indonesia will receive a 0% reciprocal tariff for leading export products such as palm oil, coffee, cocoa, and others.

Tariff exemptions apply to 1,819 Indonesian products (consisting of 1,695 industrial products and 124 agricultural products under MFN).

For Indonesian textile products, the US has prepared tariff reductions to as low as 0% through the Tariff-Rate Quota (TRQ) mechanism.

Easier entry of investment, particularly in high technology sectors for ICT, medical devices, and pharmaceuticals through adjustments to domestic content (TKDN) policies, domestic specification requirements, and deregulation of domestic policies.

Indonesia’s commitment to implementing strategic trade management signals to the business community that Indonesia is serious about creating a secure business ecosystem and ensuring that high-tech and high-value goods are not misused.

With simplified import licensing and standardization requirements for US agricultural products, businesses are expected to obtain raw materials more efficiently and maintain smooth production processes, supporting the national food security program.

Indonesia’s commitment to opening opportunities and encouraging investment flows with more flexible foreign ownership limits for US companies in certain sectors, including mining divestment and some restrictions in the financial sector.

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5. What market access commitments has Indonesia granted to the US?

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Indonesia opens market access for 99% of US-origin products at a 0% tariff, effective upon Entry Into Force (EIF) of the agreement.

Indonesia commits to eliminating non-tariff barriers for the US, particularly regarding import licensing, domestic content (TKDN) requirements, recognition of US standards, and halal certification.

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6. What US products will Indonesia purchase as part of the ART agreement?

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As a strategy to balance foreign trade and meet domestic energy needs, Indonesia agrees to purchase Metallurgical Coal, LPG, Crude Oil, and Refined Gasoline.

Indonesia also agrees to purchase aircraft, including components and aviation services, to enhance the competitiveness of the national and regional aviation services industry.

Indonesia will also increase purchases of US agricultural products intended as raw materials for certain food and beverage industries and the textile industry.

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7. What considerations led the government to agree to open imports of 1,000 tons of rice from the US?

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The government agreed to allocate imports for specially classified rice from the US, but actual realization will depend on domestic demand.

In the past five years, Indonesia has not imported rice from the US. The US rice import commitment of only 1,000 tons is not significant, amounting to only around 0.00003% of total national rice production, which reached 34.69 million tons in 2025.

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8. Does opening imports of US poultry products risk flooding the market and disrupting domestic poultry farmers?

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Indonesia imports US poultry in the form of live poultry, namely for grand parent stock (GPS) needs of 580,000 birds (estimated value around US$ 17–20 million). GPS is essential for domestic poultry farmers as the primary genetic source, and there is no GPS breeding facility in Indonesia.

Imports of poultry parts such as leg quarters, breasts, legs, or thighs have not been prohibited, as long as they meet animal health, food safety, specific needs, and applicable technical requirements.

For domestic food industry needs, Indonesia also imports mechanically deboned meat (MDM) as raw material for sausages, nuggets, meatballs, and other processed products, with estimated import volumes of 120,000 to 150,000 tons per year.

The government continues to prioritize protection of domestic farmers and maintain balance in national poultry supply and prices. There is no policy that sacrifices domestic industry.

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9. Does Indonesia open corn imports and require annual imports of US corn that could disrupt domestic production?

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This provision regulates that Indonesia grants access to import US-origin corn for use as raw materials for the food and beverage industry (F&B) in certain annual volumes. Corn import needs for the F&B industry in 2025 are around 1.4 million tons. US corn products have specifications and quality standards required by the F&B industry.

This provision is important to ensure adequacy of key raw materials for the F&B industry, which contributes 7.13% to national GDP and accounts for 21% of total non-oil and gas industrial exports (valued at US$ 48 billion), and employs up to 6.7 million workers in 2025.

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10. Why did the government agree to allow imports of US alcoholic beverages into Indonesia?

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Based on 2025 data, Indonesia managed alcoholic beverage imports valued at US$ 1.23 billion. Imports of alcoholic beverages from the US amounted to around US$ 86.1 million (only 7% of total alcoholic beverage imports). The figure is relatively small compared to imports from European countries.

Availability of diverse and quality products supports Indonesia’s competitiveness as an international destination and increases tourism spending. At the same time, Indonesia actively protects and promotes domestic alcoholic beverage products, such as beer and wine, as leading export products.

All alcoholic beverage imports remain subject to licensing requirements, information disclosure, and food and beverage safety regulations under the Food and Drug Monitoring Agency (BPOM).

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11. Is it true that the government allows entry of used clothing from the US that could disrupt the national textile industry?

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Not true. What is regulated here is the import of shredded worn clothing (SWC), namely clothing that has been destroyed into industrial raw materials and has no economic value as intact used clothing resold in the market (thrifting).

SWC is imported for raw material needs in patchwork and recycled textile (yarn) production. This is substantively and regulatorily different from the prohibition on imports of ready-to-wear used clothing.

The government has ensured that domestic industries will absorb all SWC imports as production inputs, so no products enter the market as used clothing.

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12.. What will the government do if US imports flood the domestic market?

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Under the ART provisions, Indonesia and the US have a Council on Trade and Investment that will periodically discuss implementation of the agreement, including if significant import surges occur and disrupt domestic market stability or bilateral trade.

13. How does the government ensure that Indonesian citizens’ personal data are not misused by the US?

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Data transfers agreed under the ART remain subject to domestic regulations, namely the Personal Data Protection Law. The data referred to in the agreement are business-related data (application systems). Cross-border data transfer is a core infrastructure for e-commerce, digital financial services, cloud, and other digital services.

There is no surrender of data sovereignty. The government ensures that physical and digital data transfers (cloud transmission and cable) are conducted within a secure and reliable data governance framework, without compromising citizens’ rights.

Regulatory certainty on data transfers strengthens Indonesia’s position as a regional digital economy hub. Global technology companies require regulations that facilitate cross-border data processing with adequate data protection. With credible governance, Indonesia can attract data center investments, cloud infrastructure, and other digital services.

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14. Does the government exempt all US products from halal certification?

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No. Indonesia continues to enforce halal certification for food and beverage products. Food and beverages containing non-halal content must be labeled non-halal to protect domestic consumers.

US-origin cosmetics, medical devices, and other manufactured products must still comply with product standards, quality and safety requirements, good manufacturing practice, and detailed product content information. This ensures consumers in Indonesia are fully informed about products used.

Indonesia and the US have a Mutual Recognition Agreement (MRA) with Halal Certification Bodies in the US. This allows halal labels issued in the US to be recognized in Indonesia, in line with increasing demand for high-quality halal products, particularly meat and other consumer goods from the US.

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15. Will eliminating import duties to 0% for more than 99% of US products negatively impact MSMEs and local industry?

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Indonesia’s average effective MFN tariff rate is already relatively low, around 8.1%. Indonesia has also implemented 0% tariffs through various free trade agreements (FTA/CEPA) with major trading partners, which represent around 80% of Indonesia’s total trade.

Most products receiving 0% tariff treatment are inputs, raw materials, capital goods, and industrial components meeting US standards. These products are needed by domestic businesses, including MSMEs, to produce goods with more competitive quality, standards, and pricing for domestic and export markets.

If trade activities threaten the existence and sustainability of local industries, the government may apply additional trade remedy instruments (Safeguard, Anti-dumping, and Anti-subsidy) in accordance with WTO rules.

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16. Is it true that US medical and pharmaceutical products will be accepted without re-testing in Indonesia? Does this weaken BPOM’s role?

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BPOM and the US Food and Drug Administration (FDA) have extensive technical cooperation in harmonizing product safety standards, exchanging product safety information, and supervising drugs, vaccines, and cosmetics.

Indonesia recognizes marketing authorizations issued by the FDA as evidence that products meet safety, quality, and efficacy standards. The FDA is known as one of the strictest regulatory authorities globally.

If a product has undergone rigorous evaluation in the US, Indonesia does not need to repeat the entire testing process from the beginning, to avoid duplication.

Products must still undergo administrative licensing processes in Indonesia and remain under BPOM supervision. However, FDA technical evaluations are recognized as sufficient evidence to meet Indonesian marketing authorization requirements.

If significant safety, efficacy, or quality issues arise in the future, Indonesia retains authority to take supervisory actions.

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17. Are US companies exempted from domestic content (TKDN) requirements? Does this mean TKDN is abolished?

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The domestic content (TKDN) policy remains in force and applies in the context of government procurement. TKDN requirements relate to government projects or spending, not all goods circulating in the market. This policy promotes use of Indonesian-made products.

Goods sold commercially in the national market or directly to consumers are generally not subject to TKDN requirements.

Therefore, this provision does not alter broader market competition mechanisms or automatically create unfair conditions for domestic businesses.

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18. Are US companies exempted from Value Added Tax (VAT)?

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No. Indonesia continues to impose VAT on activities of US companies.

The agreement ensures that VAT application is not discriminatory toward US companies. Indonesia will impose VAT on US companies as long as the same provisions apply to other countries.

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19. Does cooperation on critical minerals mean Indonesia will export raw critical minerals to the US?

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No. Indonesia does not open exports of raw critical minerals to the US. The government does not relax the raw material export ban under this agreement.

The ART encourages US companies to cooperate with Indonesian companies in downstream processing and development of critical minerals and rare earth industries. US companies may conduct mining and processing domestically, and processed commodities may then be exported in line with existing business practices and regulations.

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20. Has Indonesia agreed not to require US digital platform companies to cooperate with press companies?

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Under the ART, Indonesia agreed to the US request not to mandate digital platform companies (PPD) to cooperate with press companies through paid licensing, revenue sharing, or sharing aggregated user data.

However, obligations for PPD to cooperate with press companies remain possible through other forms of cooperation as mandated by Article 7 paragraph (3) letter d.

Voluntary agreements may also serve as an option for cooperation between US PPD and press companies.

Consideration is being given to imposing a Digital Service Tax or VAT on electronic system trade (PMSE), following best practices in several OECD countries (France, United Kingdom, Italy, Spain, Austria) at 2–7%. Revenues may be used to establish a Digital Literacy Development Fund or similar entity to support quality journalism for domestic newsrooms.

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21. What commercial agreements were reached under the ART?

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As part of efforts to balance trade and ensure supply of essential products needed by Indonesia from the US, several commercial agreements are included in the ART, including:

Purchases of energy products (LPG, crude oil, and gasoline) worth US$ 15 billion.

Purchases of commercial aircraft and aircraft components worth US$ 13.5 billion.

Purchases of agricultural products (cotton, soybeans, soybean meal, wheat, and corn) worth US$ 4.5 billion.

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22. Does the ART agreement also address security issues and the South China Sea?

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The ART only addresses agreements related to trade and investment, and does not cover non-economic matters such as defense and security.

The ART excludes discussions related to national security and border security.