Why Indonesia should ditch Trumps mineral trade deal

The February 19 Indonesia-United States trade deal was announced as a breakthrough. Headlines focused on tariff cuts and major business deals. But the provisions on critical minerals show why the deal could prove a strategic burden more than a win.

Under the deal, Indonesia agreed to open access to critical mineral exports to the United States, including nickel, cobalt and rare earth elements used in batteries, electronics and electric vehicles. A White House fact sheet said barriers on critical minerals would be removed and US companies would be supported in developing supply infrastructure.

Hours after the agreement was announced, the US Supreme Court struck down key elements of President Donald Trump’s global tariff policy, ruling that his use of emergency powers to impose sweeping tariffs was unauthorized.

The court found that only Congress can levy such trade barriers. The decision undermined the legal foundation of tariffs that were a central lever in negotiations with trading partners, including Indonesia.

The timing is striking because it exposes a core weakness in the new deal. The pact was negotiated on the premise that US tariff concessions would open markets and build leverage in return for Indonesian commitments on critical minerals.

With the Supreme Court decision invalidating the legal basis for much of that tariff strategy, the premise of reciprocal pressure shifts. It should prompt a reassessment of the agreement’s terms, especially where it touches on national industrial strategy.

Critical minerals are not ordinary exports. They are essential inputs for electric vehicles, renewable energy, electronics and national defense supply chains. Indonesia once used export bans on raw ore to push investors to build smelters and refineries domestically, a policy that helped develop local processing capacity and create higher-value jobs.

The new agreement removes those export restrictions for US access without clear, enforceable commitments that processing capacity will remain in Indonesia.

The text calls for cooperation on mining and downstream production, but cooperation is not obligation. Nothing in the language requires US companies to transfer technology, build facilities in Indonesia or share proprietary processes with domestic partners. It is one thing to invite foreign investment; it is another to surrender control of strategic resources without securing tangible industrial benefits.

The Supreme Court ruling underscores how fragile the deal’s reciprocal leverage has become. The tariff cuts Indonesia accepted were meant to unlock US market access, a trade-off for opening critical mineral supply.

But with the US executive branch stripped of its asserted authority to impose and enforce tariffs at will, much of that leverage evaporates. That diminishes the rationale for accepting terms that weaken long-standing domestic policies aimed at moving up the value chain.

In this new legal context, policymakers in Jakarta could use the Supreme Court decision to reconsider or revise the agreement in its current form. Allowing critical minerals to flow abroad under limited conditions without binding commitments on processing and local capacity building weakens national economic sovereignty.

Safeguards on exports, enforceable technology transfer requirements and strong local content rules would need to be integral to any trade agreement involving critical minerals.

Indonesia can engage with the United States without sacrificing its industrial strategy. Trade and cooperation are not zero-sum, but neither should they become concessions in disguise.

A well-structured agreement could retain market access while requiring foreign investors to help build domestic capacity, train local workers and contribute to research and development. Those are durable gains; raw export flows are not.

If the deal remains unchanged, Indonesia risks locking in a framework that benefits foreign supply chains more than its own industrial future. Critical minerals are not simply commodities to be traded freely.

They are strategic national assets. A balanced partnership would require Indonesia to capture the economic upside of processing and manufacturing, not just income from extraction.

The review period before legislative ratification offers a moment to demand concrete commitments, not symbolic language on cooperation. Without such adjustments, the trade deal could be remembered not as a milestone in bilateral commerce, but as a moment when Indonesia gave up leverage without securing lasting gains.

That is not a balanced partnership. It is a missed opportunity in a world where control over critical minerals increasingly defines economic and technological leadership.

Bhima Yudhistira Adhinegara is executive director of the Jakarta-based Center of Economic and Law Studies (CELIOS)independent research institute. Muhammad Zulfikar Rakhmat is director of the institute’s China-Indonesia Desk.