The new geopolitics of trade is no longer written in tariffs alone. It is etched into nickel seams, coded into battery supply chains and negotiated quietly in the language of “reciprocity.”
The recently finalized Indonesia–US tariff and critical minerals package is not just another trade deal. It is a signal flare for a world entering a more anxious, mineral-hungry age.
By late 2025, Jakarta and Washington had converged on a framework that links reduced US tariff exposure — settling around 19% rather than the earlier threatened 32% — to expanded American access to Indonesia’s critical minerals, especially nickel.
The agreement, due for formal signing in early 2026, also reaches into digital trade, technology cooperation and the rollback of selected non-tariff barriers. On paper, it is transactional. In practice, it reshapes strategic leverage across the Indo-Pacific.
Nickel is the quiet protagonist of this story. Indonesia accounts for more than half of global nickel production and sits at the center of the electric-vehicle (EV) revolution. The International Energy Agency estimates that demand for nickel used in batteries could rise by nearly 100% by 2030 under net-zero scenarios.
For Washington, locked into strategic competition with China and acutely dependent on foreign mineral supplies, Indonesia is no longer just Southeast Asia’s largest economy. It is a pillar of future industrial security.
This explains why Indonesia’s deal differs from parallel US arrangements with Malaysia, Thailand or Vietnam. While those agreements also hover in the high-teens tariff range, Indonesia’s package cuts closer to the bone of the national development strategy.
For years, Jakarta used export bans and local-content rules to force downstream processing, building smelters and battery plants at home. Those policies delivered investment and jobs but drew legal challenges and diplomatic pressure. The new framework loosens some of that control in exchange for market access and geopolitical favor.
The asymmetry is revealing. The US approaches minerals as a vulnerability to be managed — diversifying supply away from China, where roughly 90% of rare-earth processing is concentrated.
Indonesia approaches minerals as a ladder to development, a chance to escape the old “pit-to-port” model that trapped resource-rich states at the bottom of global value chains. One side seeks resilience; the other seeks transformation.
History offers a warning here. Resource diplomacy has rarely been neutral. From oil in the Middle East to copper in Latin America, strategic materials have shaped alliances and resentments alike.
The United Nations’ 1962 Declaration on Permanent Sovereignty over Natural Resources was born of this experience, asserting that nations have the right to control their own wealth for the benefit of their people. Six decades on, that principle is being tested again — this time under the banner of decarbonization.
Think tanks have begun to voice unease. The Natural Resource Governance Institute warns that the clean-energy transition risks reproducing extractive inequality unless producer countries retain policy space.
UN University researchers have gone further, proposing a Global Minerals Trust to manage critical resources cooperatively, stabilize markets and embed equity into supply chains. Chatham House notes that without trust-building institutions, mineral competition could become a destabilizing force in international affairs.
Indonesia’s calculus is therefore fraught. The immediate gains are tangible. Reduced tariff exposure protects exporters from sudden shocks. Carve-outs for sensitive products such as palm oil and coffee preserve market access. Greater regulatory clarity may attract US capital and technology into downstream processing. In the short term, these are real dividends.
The risks are slower but deeper. Rolling back export controls and local-content rules narrows industrial policy options just as global competition for value-added manufacturing intensifies.
Without binding guarantees on processing, technology transfer or employment, mineral exports can revert to raw flows with limited domestic benefit. Environmental pressures loom large: expanded nickel mining has already raised alarms over deforestation, water pollution and community displacement, drawing scrutiny from civil society groups and trade watchdogs.
For Washington, the deal offers strategic relief but not without cost. Diversified nickel supply supports electric-vehicle ambitions and reduces exposure to geopolitical choke points. Enhanced access to Southeast Asia’s largest market benefits US exporters and reinforces regional influence.
Yet reputational risks shadow the agreement. If mineral access is seen to come at the expense of environmental standards or local communities, the credibility of “values-based trade” erodes. Heavy-handed tariff diplomacy also risks reinforcing perceptions of coercion, nudging ASEAN states to hedge more closely with China rather than align decisively with the United States.
Comparisons sharpen the picture. Canada has tied critical minerals funding to Indigenous participation and consent. The European Union increasingly embeds labor and environmental clauses into trade instruments. Australia, itself a critical-minerals superpower, now debates how to balance sovereign capability with global responsibility.
Against this backdrop, Indonesia’s experience reads less as an exception and more as a preview. What emerges is not a simple win-lose bargain, but a test of a broader system.
Minerals are becoming the connective tissue between climate policy, industrial strategy and foreign relations. The International Energy Agency estimates that an electric vehicle requires six times more mineral inputs than a conventional car. Offshore wind turbines require nearly six times as many minerals as gas-fired plants. These numbers translate directly into power, profit and pressure.
The danger lies in mistaking access for a solution. Securing minerals without addressing governance, equity and sustainability risks turns the green transition into a new theater of grievance.
Already, scholars speak of green colonialism, where decarbonization in wealthy states depends on intensified extraction elsewhere. That narrative corrodes trust — and trust is the scarce commodity in a fragmented world.
A different path is possible. Mineral diplomacy can be designed around phased access tied to domestic processing capacity, transparent contracts, enforceable environmental standards and shared benefits. Trade frameworks can protect industrial development rather than hollow it out. Strategic partnerships can be built on predictability rather than pressure.
The Indonesia-US agreement will not determine that future alone. But it illuminates the crossroads. In the rush to electrify, the world is relearning an old lesson: resources shape order.
Whether that order is brittle or just will depend on choices made now, in the quiet clauses of trade texts and the contested politics of extraction. For middle powers and emerging economies alike, the question is no longer whether minerals matter — but whose terms will govern them.
Kurniawan Arif Maspul is a researcher and interdisciplinary writer focusing on Islamic diplomacy and Southeast Asian political thought.
