U.S.-Indonesia Trade Deal Cuts Tariffs, Boosts Market Access

The White House announced on Tuesday that the United States and Indonesia have reached an agreement on a trade framework, under which Indonesia will eliminate tariffs on most U.S. imported goods. This framework, titled the "Reciprocal Trade Agreement," sets the U.S. tariff on Indonesian imports at 19%. While this rate is higher than the 10% benchmark tariff applied to nearly all other countries, it is significantly lower than the 32% uniform tariff initially proposed for Indonesian goods under the "Liberation Day" tariff plan announced by Trump in April.

The joint statement emphasized that the U.S. and Indonesia will continue negotiations over the next few weeks to finalize the details of the "Reciprocal Trade Agreement" and prepare for its signing. During this period, both countries will complete the necessary domestic procedures before the agreement takes effect. This latest framework aligns with the content announced by Trump on social media last week, following a phone call with Indonesian President Joko Widodo, where he stated that a deal had been finalized.

The framework includes a series of upcoming business transactions between the two countries, including a $3.2 billion aircraft procurement agreement and a $15 billion energy product purchase plan. It also addresses various non-tariff barriers and other obstacles faced by the U.S. in the Indonesian market. According to the U.S. Department of Commerce, Indonesia is one of the top 25 trading partners of the U.S., with bilateral trade in goods exceeding $38 billion in 2024 and a U.S. trade deficit of $17.9 billion.

The U.S. Trade Representative, in a statement, highlighted that the agreement demonstrates the U.S.'s ability to secure broad market access while protecting domestic industries. The statement also noted that U.S. manufacturers, who have long faced high tariffs and complex requirements, will gain unprecedented access to the Indonesian market, and the digital services sector will benefit from greater certainty. The agreement is one of the few framework trade agreements released by the Trump administration, with similar agreements also reached with the United Kingdom, Vietnam, and the Philippines. However, these agreements have not yet been confirmed by the participating countries.