Jakarta, March 4, 2026 — Indonesian Business Council (IBC) evaluates the Agreement on Reciprocal Trade (ART) between the Republic of Indonesia and the United States as a strategic development that requires careful and evidence-based evaluation, amid changing tariff policies in the United States.
The ART was signed on February 19, 2026, with provisions for a 19 percent reciprocal tariff imposed by the United States on Indonesia. However, the following day, the United States Supreme Court held that the use of the International Emergency Economic Powers Act (IEEPA) as a basis for imposing global tariffs was invalid. The US government then imposed a temporary 10 percent tariff under Section 122 of the Trade Act of 1974 for up to 150 days.
The IBC noted that the Bylaws are still awaiting completion of domestic procedures and formal notification before they can be implemented. By their terms, the Bylaws will take effect only 90 days after the exchange of written notifications by both governments, with no deadline specified in the agreement. This provides Indonesia with ample time to conduct a more comprehensive review before the implementation phase.
“The evaluation of the ART must be based on its net impact on the Indonesian economy, not just the tariff rate. What needs to be measured is its impact on employment, domestic value added, the trade balance, policy space, and legal certainty for businesses,” said William Sabandar, Chief Operating Officer Indonesian Business Council.
Denni Purbasari, Chief Economist Indonesian Business Council, add “Businesses need clarity on the policy direction during this transition period. Assessing the ART should therefore examine legal stability, tariff consistency, and sectoral implications, alongside consultation with stakeholders, particularly the business community.”
The IBC notes that the scope of the ART extends beyond tariffs to include provisions on non-tariff barriers, digital trade and technology, rules of origin, and other commitments that could impact domestic policy and regulatory governance. Given its broad scope, domestic processes for the ART must address constitutional provisions and laws related to international agreements to ensure legal certainty and policy legitimacy.
Based on these considerations, IBC encourages the government to utilize the time before notification to conduct a more comprehensive cross-sectoral review, accompanied by consistent public communication that the Bylaws have not yet come into effect and are still undergoing domestic processing. IBC also emphasizes the importance of good governance.