Ask Onix
US-Indonesia trade agreement finalized
The Trump administration and Indonesia have concluded a trade pact that reduces US tariffs on Indonesian goods to 19% from 32%, officials announced on Thursday. The deal aims to expand bilateral trade and investment while addressing long-standing trade barriers.
Key terms of the agreement
Under the agreement, Indonesia will eliminate trade restrictions on over 99% of US imports, facilitating more than $30 billion in American goods purchases. The White House stated that the deal includes tariff exemptions for specific Indonesian products, such as clothing and textiles made with US-sourced cotton and synthetic materials.
US Trade Representative Jamieson Greer described the pact as a step toward dismantling trade barriers while prioritizing American interests. The agreement was finalized during Indonesian President Prabowo Subianto's visit to Washington for the inaugural meeting of the Trump-led "Board of Peace," which focused on Gaza reconstruction efforts.
Mutual economic benefits
Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto, called the deal mutually beneficial, noting that 90% of Indonesia's tariff requests were accepted by the US. He emphasized the agreement's goal of fostering economic prosperity, resilient supply chains, and respect for national sovereignty.
"The vision of this agreement is mutual economic prosperity, strong supply chains, and respect for each country's sovereignty,"
Airlangga Hartarto, Indonesian Coordinating Minister for Economic Affairs
Indonesia secured tariff exemptions for over 1,700 products, including key exports like coffee, spices, chocolate, natural rubber, and palm oil-its top export. In return, Indonesia agreed to adopt US standards for car safety, emissions, medical devices, and pharmaceuticals, while opening its markets to American agriculture, healthcare, seafood, technology, and automotive products.
Major commitments and investments
As part of the deal, Indonesia committed to purchasing billions of dollars in US goods, including cotton, soy, beef, Boeing aircraft, and energy products. The agreement also includes provisions for US firms to develop Indonesia's rare earths infrastructure, which will help Washington secure critical mineral supplies.
The pact will take effect in 90 days, though both countries retain the option to adjust terms through mutual agreement, Airlangga said.
Corporate deals and future outlook
Ahead of the agreement's announcement, Indonesian and US companies signed partnerships worth $38.4 billion across sectors such as mining, technology, and textiles. President Prabowo highlighted the deals as a means to reduce Indonesia's trade surplus with the US.
"I'm very optimistic about the future of our relationship,"
Prabowo Subianto, President of Indonesia
Prabowo made the remarks during a dinner hosted by the US Chamber of Commerce on Wednesday, underscoring the broader strategic and economic ties between the two nations.
