Executive Summary

A Deal Invalidated the Day After It Was Signed

• February 19, 2026: Indonesia and the US signed the Bilateral Agreement of Reciprocal Trade (ART), reducing the reciprocal tariff from 32% to 19% and granting zero-tariff exemptions to 1,819 tariff lines — including palm oil, rubber, coffee, and cocoa.
• February 20, 2026: The US Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs — invalidating the entire legal basis of the ART, one day after it was signed.
• February 21, 2026: The Trump administration invoked Section 122 of the Trade Act of 1974, initially at 10%, then escalated to 15% — the statutory maximum — within 24 hours.
• The Trump administration responded within hours by invoking Section 122 of the Trade Act of 1974 at 10%, then escalating to 15%—the statutory maximum—on February 21, 2026.
• Indonesia’s effective tariff rate (ETR) now stands at 20.3%, exceeding the negotiated deal rate of 19.7% by 0.6 percentage points.
• This ETR level assumes that the Trump administration imposes the statutory maximum of 15% on top of MFN rates
• If the administration set the 15%, including the MFN rates, the estimated ETR will 17.7%.
• Yet it remains unknown which rates the administration will impose.