Japan and Indonesia tariff deals with Trump turn into long-term commitments

Japan and Indonesia struck tariff deals with Donald Trump’s administration and are now discovering that the price of “certainty” is a set of promises that are hard to unwind. According to the New York Times, the agreements were sold as a way to secure lower US tariffs, but they also committed the countries to investment and purchasing pledges that outlive the immediate threat.

The mechanics matter. A tariff is a visible tax at the border; a “deal” is often a package of softer commitments—foreign direct investment announcements, procurement plans, and memoranda of understanding—that can be framed as win-win and therefore politically safer to sign. But once a government has publicly promised factories, ship orders, or multi-year buying programs, backing away becomes a domestic scandal even if Washington later shifts the goalposts. A tariff schedule can be revised with a signature; a headline investment pledge becomes part of a leader’s credibility, and it quickly turns into a talking point for opposition parties, unions, and local governments that were promised jobs.

The Times describes officials trying to satisfy US demands while keeping room to manoeuvre, yet the structure of these commitments tends to remove that room. Non-binding MoUs can still be operationalised by civil servants, state-owned enterprises, and export-credit agencies, which then build projects, financing, and supply chains around them. That is how a political announcement becomes an economic fact: contracts follow, and then sunk costs follow. The bill also has a habit of landing off-budget—through state lenders, industrial policy vehicles, or procurement mandates—making it easier for today’s cabinet to push costs onto future governments.

There is also a distributional angle. Firms positioned to “deliver” on a pledge—big exporters, defence contractors, infrastructure developers—gain preferential access to state attention and sometimes state guarantees. Households pay in less visible ways: higher procurement costs, diverted capital, or reduced flexibility when global demand changes. When trade policy is negotiated as a sequence of exceptions, the incentive is to overpromise. The downside of the promise is diffuse and delayed; the upside is immediate and concentrated.

The result is a new kind of tariff regime: not just rates and quotas, but a market for exemptions where governments pre-commit domestic resources to reduce US policy risk.

In the Times’ account, what looked like a one-off bargaining chip has become a standing obligation—signed in public, implemented by bureaucracies, and difficult to reverse without paying twice.