Trump: Indonesia to eliminate 99% of their tariff barriers

Trump: Indonesia to eliminate 99% of their tariff barriers

U.S. President Donald Trump has announced a significant tariff deal with Indonesia, which will see the Southeast Asian nation eliminate 99% of its tariff barriers. The new agreement, announced on July 2, 2025, reduces tariffs from the previously planned 32% to a mere 19% [1]. This deal will come into effect on August 1, 2025, and is expected to facilitate smoother trade between the two nations.

Under the new agreement, Indonesia has agreed to remove tariffs on most U.S. goods, while the U.S. will impose a 19% tariff on Indonesian exports. Additionally, Indonesia has committed to purchasing USD 15 billion worth of U.S. energy, USD 4.5 billion in agricultural products, and 50 Boeing jets [1]. This deal is part of a broader effort by the Trump administration to renegotiate trade agreements and reduce trade deficits.

The Indonesian government has described the negotiations as an "extraordinary struggle," highlighting the complexity and intensity of the discussions [1]. The deal also includes an exemption for Indonesian copper, which may signal that the U.S.-Indonesia agreement includes an exemption from future Section 232 tariffs on copper [1].

This development comes amidst a turbulent period for U.S. tariff policy. In April 2025, Trump announced new tariffs on 57 trading partners and a 10% universal tariff on all other imports [2]. While the 10% baseline tariff remains in place, higher country-specific tariffs have been paused until August 1, 2025, to allow for negotiations [2]. The Trump administration has sent letters to several trading partners, including the EU and Switzerland, offering different tariff rates as a negotiating strategy [2].

The new Indonesia deal is part of a broader trend of Trump's administration signing "framework" trade deals with various partners. These deals, which are not comprehensive free trade agreements (FTAs), aim to address specific trade issues such as tariff and non-tariff barriers, digital trade provisions, and purchases [2]. Other recent deals include framework agreements with the U.K., China, and Vietnam [2].

The elimination of 99% of Indonesia's tariff barriers is expected to boost trade between the two countries, potentially benefiting U.S. businesses and investors. However, the full impact of this deal will depend on how it is implemented and how it affects other trade agreements and policies.

References:
[1] https://www.seafoodsource.com/news/supply-trade/trump-announces-tariff-deal-with-indonesia
[2] https://www.akingump.com/en/insights/alerts/state-of-us-tariff-policy-and-whats-next-focus-on-eu-and-switzerland