Tariff Gains, Regulatory Costs: A Review of the Indonesia–United States Agreement on Reciprocal Trade and Its Implications for the Palm Oil Sector

The Agreement on Reciprocal Trade (ART) between Indonesia and the United States, signed in February 2026, grants zero-tariff treatment to 1,819 Indonesian tariff lines, including palm oil and its derivatives. While this development has generated optimism regarding expanded market access, a critical question remains: Does the ART genuinely deliver net benefits for Indonesia, particularly for its palm oil sector? This study employs a qualitative literature review to examine the interplay between tariff concessions and non-tariff measures (NTMs) embedded within and alongside the ART framework. Drawing on peer-reviewed articles, policy documents, and official government sources published since 2020, this paper identifies four thematic findings. First, tariff reductions create selective but narrow export opportunities concentrated among well-capitalized agribusinesses. Second, environmental, labor, and traceability standards function as implicit market-access costs that may offset tariff gains. Third, structural vulnerabilities—particularly low smallholder productivity and limited ISPO certification coverage—amplify the distributional asymmetry of ART's benefits. Fourth, the agreement risks narrowing Indonesia's domestic policy space by embedding external regulatory standards into bilateral trade commitments. The paper concludes that ART can yield positive outcomes for Indonesia's palm oil sector only if accompanied by robust domestic reforms, including publicly financed traceability systems, accelerated smallholder replanting, mutual recognition of ISPO certification, and coherent alignment of trade, industrial, and environmental policies. Without such interventions, the apparent "tariff victory" may mask deeper structural dependencies