Indonesia’s nickel sector faces headwinds from Trump’s electric vehicle curbs

US President Donald Trump’s decision to revoke electric vehicle incentives has raised concerns over its impact on Indonesia’s vital nickel sector and China’s dominance widening in the Southeast country’s EV supply chain.

Trump targeted EVs immediately after he was sworn in on January 20, annulling a 2021 executive order by former president Joe Biden that called for half of all new vehicles sold in the United States to be electric by 2030.

While Biden’s policy was not legally binding, it prompted domestic and foreign carmakers to boost investments in EV technologies, creating ripple effects across Southeast Asia’s vehicle and other related industries.

In Indonesia, which holds the world’s largest nickel reserves, Biden’s incentives offered hope of a more diverse set of investors in the country’s nickel mining and downstream production. But analysts say Trump’s reversal could transform the global outlook for the strategic metal.

Indonesia banned the export of unprocessed nickel ore in 2020 to boost its EV battery supply chain in a move that has led to billions of dollars of related investments into the country, mostly from China.

The US has been unwilling to invest in Indonesia’s nickel industry, largely due to concerns about deforestation and water pollution in the country.