Indonesia faces a ‘perfect storm’ of downgrade fears, trade tensions and now the Iran war—and 2026 has only just started

Airlangga Hartato was all smiles on Feb. 19 as he signed his name to what he called a “win-win” deal. After four trips to Washington, seven formal negotiating rounds, and nine meetings with U.S. Trade Representative Jamieson Greer, Indonesia’s economy minister had finally secured a reduction in U.S. duties on Indonesian goods—from a punishing 32% to a more tolerable 19%.

The agreement, grandly titled Toward a New Golden Age for the U.S.–Indonesia Alliance, promised tariff exemptions for key exports like palm oil, coffee, cocoa, and rubber. In exchange, Jakarta pledged to scrap barriers on more than 99% of U.S. imports and commit to some $33 billion in purchases of American energy, aircraft, and agricultural products.

The very next day, the U.S. Supreme Court struck down Trump’s Liberation Day tariffs—including the original 32% levy that had forced Jakarta into the talks in the first place—as unconstitutional. (Trump has since followed up with two new trade probes on Indonesia, one on excess manufacturing and another on forced labor.)

The Supreme Court’s ruling was the most visible example of bad timing in what has been a punishing few...