JakartaPost-May 15
Trade talks will mean balancing the US need for critical minerals and the Indonesian desire to develop its domestic processing. The United States has partially reversed course on its sweeping “Liberation Day” tariffs announced by President Donald Trump by lifting global duties on selected critical minerals. The move is hardly surprising. Such materials are vital to the American economy, with applications in everything from smartphones to guided missiles. A subsequent amendment to the order widened the exemptions to include smartphones, computers and some other electronic items which depend heavily on critical minerals as input materials. That tweak, in effect, boosts US access to these resources and makes their global availability even more strategically sensitive. Countries rich in such minerals now find themselves with renewed leverage. China, which produces around 90 percent of the world’s rare earths and is a key supplier to the US, promptly responded by suspending exports of a wide range of critical minerals. Indonesia, which holds 34 percent of global nickel reserves, has hinted that it may use its critical minerals as a bargaining chip in response to the tariffs. Such bargaining power is not just hypothetical. Both China’s and Indonesia’s restrictions are cited as non-tariff barriers in the US Trade Representative’s latest National Trade Estimate Report on Foreign Trade Barriers. Washington and Jakarta recently signed a document on the “Treatment of Information Related to Bilateral Agreement on Reciprocal Trade, Investment and Economic Security”. Though the details remain confidential, previous pledges for cooperation within the critical mineral supply chain suggest possible cooperation on critical minerals. Indonesia, for its part, is now weighing its next move. It faces a familiar dilemma: whether to press its short-term advantage or stay the course on its long-term industrial ambitions. Using mineral exports as a bargaining chip risks prolonging trade talks with the US. Unlike China, a major economic power that can afford to redirect its exports elsewhere, Indonesia does not have the same flexibility. As a developing economy, it may not be able to endure the financial hit of extended tariffs. That is likely why Indonesia has so far taken a more cooperative stance. Read more at: https://www.thejakartapost.com/opinion/2025/05/15/will-nickel-be-indonesias-trump-card.html.
