Indonesia banks on critical minerals to avert US tariffs – will it work?

Indonesia is banking on its rich reserves of critical minerals to persuade the United States to pull back steep looming tariffs – an offer that could appeal to American strategic interests even as concerns remain about regulatory risks and China’s entrenched role in the country’s mineral supply chains.

Coordinating Minister for Economic Affairs Airlangga Hartarto has described Indonesia’s critical minerals proposal as its “second-best offer” to avert a looming 32 per cent tariff under President Donald Trump’s trade actions.

Trump announced the tariffs in April, with a 90-day reprieve allowing negotiations. During this period, Indonesian exports face a temporary 10 per cent duty, set to rise unless a deal is reached by July 9.

“We also offered the US [an opportunity] to invest in the critical mineral ecosystem, together with Danantara,” Airlangga said on Monday, referring to Indonesia’s sovereign wealth fund. “For the US, Indonesia’s offer is quite interesting.”

He said the US needed access to Indonesia’s copper for its electronics, defence and aerospace sectors, while also highlighting opportunities in nickel and other minerals vital to electric vehicles. Any investment, he said, would take the form of “brownfield” projects – leasing existing facilities such as those run by Freeport – rather than new construction.