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...