Once upon a time, trade was pretty straightforward. Tariffs went up, tariffs came down, and diplomats shook hands. Simple as that, but that world is disappearing fast.
Today, trade is written into nickel deposits, battery supply chains, and carefully worded promises of “reciprocity,” and nowhere is that clearer than in the new Indonesia-US agreement on tariffs and critical minerals.
This isn’t just another trade deal. It’s a signal that the world is entering a tense, resource-hungry era — one driven by electrification, decarbonization, and growing strategic rivalries.
By late 2025, Jakarta and Washington had hammered out a framework: US tariffs on Indonesian goods would drop to about 19%, down from a threatened 32%. In exchange, American companies gain better access to Indonesia’s critical minerals — especially nickel, the unsung hero of the electric-vehicle revolution. The formal signing is expected in early 2026.
The deal isn’t limited to minerals. It touches digital trade, tech cooperation, and the easing of certain non-tariff barriers. On paper, it’s a practical swap. In reality, it quietly shifts power across the Indo-Pacific.
Nickel is at the centre of it all. Indonesia produces more than half of the world’s nickel, which powers the batteries that run electric vehicles. According to the International Energy Agency, demand for battery-grade nickel could nearly double by 2030 if the world follows net-zero targets.
For the US, which is locked in strategic competition with China and relies heavily on imported minerals, Indonesia is more than Southeast Asia’s biggest economy. It’s now a cornerstone of industrial security.
That’s why this deal stands out from US agreements with Malaysia, Thailand, or Vietnam. Those deals also hover in the high teens for tariffs, but Indonesia’s goes deeper — right into its national development strategy.
For years, Indonesia used export bans and local-content rules to encourage companies to build smelters and battery plants at home instead of shipping raw ore abroad. The strategy brought not only jobs and investment but also legal challenges and foreign pressure. Now, Jakarta is loosening some of that control in exchange for market access and geopolitical goodwill.
The imbalance is revealing. Washington treats minerals as a strategic vulnerability — something to secure and diversify away from China. Indonesia sees them as a ladder to development, a way to move beyond the old “dig and ship” model that has long trapped resource-rich countries at the bottom of global value chains.
One side seeks resilience. The other seeks transformation.
History urges caution. Resource diplomacy has rarely been neutral. Oil shaped Middle Eastern politics for decades; copper rewired alliances in Latin America. Strategic materials always leave long political shadows.
That’s why the UN’s 1962 Declaration on Permanent Sovereignty over Natural Resources insisted that countries should control their wealth for the benefit of their own people. Today, that principle is being tested again — this time under the banner of climate action.
Think tanks are already uneasy. UN University researchers have proposed a Global Minerals Trust to stabilise markets and make supply chains fairer. Chatham House warns that without trust-building institutions, competition over minerals could destabilise international politics.
Indonesia’s bet isn’t reckless, though. The short-term wins are clear: lower tariffs shield exporters from sudden shocks; special carve-outs protect key products like palm oil and coffee; and clearer rules could attract US capital and technology into domestic industries.
Yet the stakes go beyond strategy. If mineral access comes at the expense of environmental standards or local communities, claims of “values-based trade” ring hollow. Heavy-handed tariff diplomacy could also push ASEAN countries closer to China rather than Washington.
Other countries are grappling with similar questions. Canada ties critical minerals funding to Indigenous consent. The European Union increasingly builds labour and environmental standards into trade deals. Australia, a minerals powerhouse, is debating how to balance national capability with global responsibility.
Viewed this way, Indonesia isn’t an exception — it’s a preview.
Minerals are becoming the connective tissue between climate policy, industrial strategy, and foreign relations. Electric vehicles require six times more mineral inputs than conventional cars. Offshore wind farms need nearly six times the minerals of gas-fired plants. These numbers aren’t abstract — they translate directly into power, profit, and pressure.
Scholars warn of “green colonialism,” where wealthy countries decarbonise by ramping up extraction elsewhere. Trust is already scarce in a fragmented world — and this makes it even scarcer.
There is another way. Mineral diplomacy can tie access to domestic processing, transparent contracts, enforceable environmental rules, and shared benefits. Trade deals can support industrial development rather than hollow it out. Strategic partnerships can be built on predictability, not pressure.
The Indonesia–US agreement won’t decide the future on its own, but it marks a crossroads. As the world rushes to electrify, it’s relearning an old lesson: Resources shape global order.
Whether that order ends up fragile or fair will depend on choices made now — in the fine print of trade deals and the messy, contested politics of extraction. For middle powers and emerging economies alike, the question is no longer whether minerals matter — it’s who gets to write the rules.
