US and Indonesia Announce Comprehensive Trade Deal with Significant Tariff Cuts

The US has unveiled details of a trade deal with Indonesia, where Jakarta has agreed to slash nearly all tariffs on American imports. In return, Washington will cut its threatened 32% tariff to 19%. The deal aims to expand market access across the two economies, with Indonesia eliminating 99% of tariff barriers for US industrial, agricultural, and food products. Some Indonesian products may be eligible for further tariff reductions.

The United States and Indonesia have reached a landmark trade agreement, significantly reducing tariffs on bilateral trade. The deal, announced by President Donald Trump, aims to expand market access and boost economic ties between the two nations.

Under the U.S.-Indonesia Agreement on Reciprocal Trade, Indonesia has agreed to eliminate nearly all tariff barriers on U.S. imports, covering over 99% of U.S. products across sectors such as agriculture, health products, seafood, automotive, and chemicals. In return, the U.S. will implement a 19% tariff on Indonesian goods, down from the initially threatened 32% [3].

The agreement also includes provisions to address non-tariff barriers, such as local content requirements and regulatory hurdles, to facilitate smoother trade. Additionally, Indonesia has committed to removing restrictions on exports of critical minerals and other industrial commodities to the U.S. [3].

The trade deal, set to be formalized in the coming weeks, also includes provisions for digital trade, economic security, and labor standards. Indonesia has agreed to join the Global Forum on Steel Excess Capacity and take actions to address global excess capacity in the steel sector. Furthermore, Indonesia has committed to improving labor standards, including adopting a forced labor import ban and ensuring freedom of association and collective bargaining rights [3].

The agreement is expected to benefit both U.S. and Indonesian businesses and workers, providing new market opportunities and fostering economic growth. The U.S. currently runs a significant trade deficit with Indonesia, and the deal aims to address this imbalance by increasing U.S. exports to the country [3].

The U.S. and Indonesia have been in negotiations over the past few weeks, with the initial agreement reached last week reducing the threatened U.S. tariff rate from 32% to 19%. The agreement represents one of several trade deals the Trump administration has secured ahead of the August 1 negotiation deadline [1].

References:

[1] https://www.investing.com/news/politics-news/indonesias-tariff-deal-with-us-may-take-effect-before-august-1-93CH-4143646
[2] https://www.supplychaindive.com/news/trump-tariffs-us-indonesia-trade-deal-framework/753766/
[3] https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-the-united-states-and-indonesia-reach-historic-trade-deal/