Formalizing the “Grand Bargain” Between the U.S. and Indonesia: Prabowo Subianto’s Forced Hand Strengthens Donald Trump’s Position in the Indo-Pacific

On February 19, 2026, Donald Trump and Prabowo Subianto finalized the “grand bargain” between the United States and Indonesia (US-Indonesia Agreement on Reciprocal Trade).

Under the agreement, the United States agreed to reduce tariff pressure on Jakarta from 32% to 19% and to introduce duty-free access for Indonesian textile and apparel products—a strategic sector that has been severely damaged by unfair competition from the PRC.

The preferential regime is tied to the use of American rather than Chinese cotton and synthetic fibers. The deal establishes a model in which Washington trades tariff concessions for the structural displacement of the PRC from the supply chains of key Asian economies.