XA Economic Update | Trump Tariffs Fiasco After SCOTUS Decision : Full Steam Ahead, JCI?

 

By Ezaridho Ibnutama (Head of Research), Graceline Melinda (associate)

22-Feb-2026

 

 

 

President Trump’s tariff policy has returned to the spotlight following a landmark SCOTUS ruling that limits the executive’s authority to impose tariffs under the IEEPA. Below are the key points and our take on the potential impact for Indonesia:

 

 

 

🔹 SCOTUS Shoots Down Trump Tariffs

 

• The Supreme Court of the United States (SCOTUS), in a 6–3 decision, ruled that the U.S. President does not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), as the Act does not explicitly grant tariff powers. While Trump cited large trade deficits as national security threats, the Court rejected this interpretation. In Indonesia’s case, the White House has also referenced Section 232 of the Trade Expansion Act of 1962, which is separate from the IEEPA.

 

 

 

🔹 Tariffs Violated ‘Major Questions’ Doctrine

 

• Chief Justice John Roberts stated that the IEEPA contains no reference to “tariffs” or “duties,” meaning the policy violates the “Major Questions” doctrine, which requires explicit congressional authorization for major economic actions. As a result, the President must seek congressional approval to impose tariffs. The ruling may force the U.S. government to refund over USD 175 bn in tariffs imposed since April 2025.

 

 

 

🔹US-Indonesia Bilateral Trade Agreement Potentially Sidelined

 

• The SCOTUS ruling came shortly after Indonesia and the U.S. signed a bilateral trade agreement setting a 19% tariff on Indonesian goods and a 0% tariff on U.S. imports into Indonesia.

 

 

 

🔹 Commitment Ties Strengthened Through U.S. Investments

 

• Beyond tariffs, Indonesia agreed to further open its markets to U.S. businesses and capital. Indonesia committed approximately USD 33 bn in investments into the U.S., comprising USD 15 bn in energy commodities, USD 13.5 bn in aviation-related goods, and USD 4.5 bn in agricultural products.

 

 

 

🔹 Implications On No Limit of Foreign Ownership

 

• A key element of the bilateral agreement is market liberalization in Indonesia, including exemptions for U.S. goods from local content (TKDN), certification, and labeling requirements. Indonesia also agreed to recognize U.S. safety, automotive, and emission standards, easing market entry for American companies.

 

 

 

🔹 The Fallout After SCOTUS

 

• President Trump criticized the ruling but highlighted alternative legal routes to impose tariffs. Under Section 122 of the Trade Act of 1974, the President may impose tariffs of up to 15% for a maximum of 150 days without congressional approval. Trump has indicated plans to introduce a global 15% tariff and maintain other tariffs under alternative legal authorities.

 

 

 

🔹 Impacts On Indonesia-US Trade Deal

 

• As the Indonesia–U.S. trade deal will only take effect 90 days after signing, Indonesia remains exposed to policy changes. The agreed 19% tariff exceeds the potential 15% global tariff, leaving room for future renegotiation, as indicated by the White House.

 

 

 

🔹 Our Take

 

• The SCOTUS decision may improve sentiment toward Indonesia following recent MSCI and Moody’s setbacks, supporting near-term equity market optimism. However, domestic businesses face rising competition from U.S. firms benefiting from regulatory exemptions. Combined with a weakening Rupiah, some manufacturers may consider relocating to the U.S. to benefit from lower tariffs, lighter regulations, and dollar-denominated revenues. Nevertheless, the trade deal could help reverse capital outflows and, over the long term, support structural reforms that enhance Indonesia’s prospects of escaping the middle-income trap.

 

 

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NH Korindo Sekuritas Indonesia berizin dan diawasi Otoritas Jasa Keuangan (OJK). Untuk informasi lebih lanjut, anda dapat menghubuni CS kami via email CSO@nhsec.co.id