Like it or not, US President Donald Trump’s bullying of Indonesia has worked. He applied a classic negotiation tactic: demand the maximum, then settle for something still in your favor. While Indonesia celebrates a 19 percent tariff, down from the initially threatened 32 percent, the cost of this “victory” is dangerously high.
Compared to its Southeast Asian neighbors, Indonesia emerged with the worst outcome. The Philippines and Vietnam secured nearly identical tariff rates, 19 percent and 20 percent, respectively, but gave up far less. The Philippines agreed to zero tariffs on US goods such as cars, pharmaceuticals, wheat, and soy, and strengthened military ties. However, it avoided procurement obligations or surrendering digital sovereignty. Vietnam, under a 46 percent tariff threat, accepted 20 percent while preserving regulatory autonomy and avoiding major purchases from the US, committing only to prevent Chinese transshipment.
Indonesia gave away the most: it eliminated local content rules, lifted non-tariff barriers, and committed to massive procurement: 50 Boeing aircraft, $15 billion in US energy products, and $4.5 billion in agriculture imports. More concerning, Indonesia agreed to relax its data localization policies, allowing US tech firms to transfer and store Indonesian citizens’ data abroad. This opens the door to US jurisdiction under laws like the CLOUD Act, compromising Indonesia’s digital sovereignty and long-term cybersecurity, something both Vietnam and the Philippines avoided.
Indonesia’s tariff rate remains higher than the 0–10 percent it once enjoyed under trade preferences. Meanwhile, American products, from planes to corn, can now flood the market with ease. Unlike Vietnam or the Philippines, Indonesia faces deeper long-term consequences.
This is not merely a trade misstep. It represents a broader erosion of sovereignty. Foreign pressure has reshaped Indonesia’s economic policies. While the government portrays this as diplomacy, it is in fact a retreat from national interest.
The claim that Indonesia got a better deal than its neighbors is misleading. Vietnam retained regulatory power, while the Philippines avoided major economic exposure. Indonesia, however, opened wide with no proportional returns.
And then there’s China. Despite facing higher tariffs (well above 30 percent), China maintains a competitive edge in the US market due to scale, subsidies, and lower prices. Its goods, from electronics, machinery to solar panels, remain attractive and widely available. But China isn’t Indonesia’s only competitor. Many of Indonesia’s top export products, from apparel, footwear, electronics components to wooden furniture and agricultural commodities, are in direct competition with exports from Vietnam and the Philippines.
Vietnam, in particular, has become a global hub for electronics and garments, with lower production costs and faster supply chain integration. Its role in assembling devices for brands like Samsung and Apple gives it an unbeatable advantage in the US market. The Philippines, though smaller, is strong in semiconductors and agricultural exports like bananas and coconut oil. In most of these categories, Indonesian products are at a disadvantage, often 20 to 30 percent more expensive than Vietnam’s, with less brand penetration and lower logistical efficiency.
Even at the same 19 percent tariff, Indonesia’s exports are harder to sell. Meanwhile, China’s subsidized products remain cheaper despite higher tariffs. This makes Indonesia’s position precarious: squeezed from both ends by global powerhouses and regional peers alike.
Indonesia thus risks becoming both too expensive for US buyers and overwhelmed by US and Chinese imports at home. It becomes a consumer market, not a production hub. Domestic industry, especially agriculture, manufacturing, and startups, will be suffocated unless bold action is taken.
This isn’t just economic. There’s a psychological toll. When local entrepreneurs and workers are outcompeted in their own country, the will to innovate erodes. Sovereignty isn’t just lost in policy. It disappears from the national mindset.
Yet the outcome isn’t sealed. This deal is not the end. It’s the beginning of a long struggle for Indonesia to assert its sovereignty and reclaim its future. With strategic reforms, Indonesia can still turn this flawed agreement into a platform for national renewal.
Imagine a future not far from now. Indonesia has just launched its sovereign data network, hosted entirely on local servers, with full oversight by its newly empowered Personal Data Protection Authority. This isn’t just a policy win. It becomes a symbol of national dignity. Citizens trust that their health records, financial data, and personal communications are no longer exposed to foreign surveillance or corporate misuse. Schools begin teaching data rights in civic education. Universities train a new class of digital regulators and cybersecurity professionals. Tech companies line up, not only to comply, but to partner.
Meanwhile, Boeing’s sales team is still collecting checks for Indonesia’s aircraft purchases. But this time, part of the fuselage is assembled in Bandung. A service hub operates in Surabaya. The country’s best and brightest are no longer just pilots. They are engineers, software coders, systems analysts. This is what real investment reciprocity looks like.
In another part of the archipelago, small manufacturers and agro-processors are finally receiving fair support. Government contracts no longer default to multinationals, but reward local firms with innovation grants and production guarantees. A cooperative in Central Java builds tools for sustainable agriculture. A startup in Makassar exports eco-packaging. A women-led SME in West Nusa Tenggara lands a digital contract with a provincial hospital. It’s no longer a dream. It’s policy in action.
Indonesia also begins to show its teeth geopolitically. Instead of pleading for access to Western markets, it deepens its ties with BRICS and the Global South. The country co-founds a Digital South Alliance with India, Brazil, and South Africa to protect indigenous tech, resist platform monopolies, and share cybersecurity innovations. The new Bandung Spirit takes digital form.
And all this is watched, measured, and questioned, because civil society refuses to stay quiet. Journalists publish procurement audits. Activists rally for contract transparency. Students sue the government for data breaches. Public accountability becomes the immune system that keeps the democratic body alive.
The future Indonesia needs is not beyond reach. It begins with reclaiming control over its digital infrastructure. Indonesia must establish its own sovereign data network, fully managed by a strong, independent data protection authority. People’s personal data, from financial, medical, to educational, must be stored domestically and guarded from foreign surveillance. This is more than cybersecurity; it is national dignity. Civic education can include digital rights, and universities can train a new generation of regulators. This sends a signal to foreign tech companies: you want to operate here, you follow our rules, our servers, our law.
Then comes investment. Boeing may have sold us planes, but the next step is to demand that parts of those planes are built in Bandung or maintained in Surabaya. The same goes for energy and agriculture. If the government commits to billions in imports, there must be technology transfer, local jobs, and production facilities. This turns one-sided procurement into reciprocal growth.
Meanwhile, local industries need real protection and backing. Indonesia grows soy and corn, but not enough, and certainly not cheap enough, to compete with subsidized US imports. The same is true in processed foods, pharmaceuticals, and consumer goods. The government must ensure its own procurement prioritizes local producers. Cooperatives in Central Java and startups in Makassar should be the first in line for public contracts. The digital sector must also be cultivated beyond Java and Jakarta, or we risk reproducing inequality while speaking of innovation.
In the geopolitical arena, Indonesia can shift direction. Rather than remain dependent on Western access, it must strengthen ties with BRICS and other Global South partners. This means joining forces to build alternative digital infrastructures, fairer trade systems, and shared cybersecurity protocols. It’s time for the Bandung Spirit to return. This time, not in politics alone, but in technology and economy.
Finally, none of this can succeed without oversight. Civil society must stay vigilant. Every contract, procurement, and regulation tied to this deal must be scrutinized. Journalists must follow the money. Students must raise their voices. Citizens must demand transparency and push back against every sign of surrender masked as diplomacy.
This is how Indonesia wins. Not by celebrating bad deals, but by turning every concession into a lesson, and every lesson into a strategy.
Omong-Omong Media’s editorial is also published in The Jakarta Post every Monday.
