Indonesia-US Trade Deal Reached After Intense Negotiations
A new Indonesia-US trade deal has been finalized, but not without what Jakarta called an “extraordinary struggle.” The agreement was confirmed on Tuesday after tough talks between both governments.
Former President Donald Trump announced the deal on his social media platform, claiming direct negotiations with Indonesian President Prabowo Subianto led to the breakthrough.
Lower Tariffs and Major Commitments
As part of the Indonesia-US trade deal, the United States has agreed to lower its tariff on Indonesian exports from 32% to 19%. In return, Indonesia will not apply any tariffs on American exports.
According to Trump, the agreement includes major purchase commitments by Indonesia. These include $15 billion in U.S. energy, $4.5 billion in agricultural products, and 50 Boeing aircraft. Many of the planes are expected to be Boeing 777s.
Indonesia confirmed the agreement and stated that both leaders discussed the final terms over a phone call. Prabowo described the deal as a new chapter in mutual economic cooperation between the two nations.
Trade Implications and Ongoing Uncertainty
Trump hinted that Indonesia’s high-quality copper might now face fewer restrictions, possibly avoiding a looming 50% blanket tariff on all copper imports starting August 1.
While Indonesia exported only $20 million worth of copper to the US last year, it’s now in a better position compared to top copper exporters like Chile and Canada.
Commerce Secretary Howard Lutnick emphasized the shift in trade fairness, stating that the deal helps remove previous tariff imbalances. Trump also noted that India is working on a similar agreement with the U.S.
This marks Trump’s fourth trade agreement in three months, although details on earlier ones, including with Vietnam, remain unclear.
Concerns Over Business Stability
Despite these agreements, Trump’s unpredictable trade approach has left many companies uneasy. With tariffs changing rapidly, businesses fear that sudden increases could impact costs and supply chains.
Although Trump suggests companies should move production to the U.S., experts say that doing so is complex. It often requires years of planning, significant investment, and trained labor.
In 2023, Indonesia was America’s 23rd largest trading partner. The U.S. imported $28 billion worth of goods, mainly apparel and footwear, while exporting $10 billion, primarily oilseeds, grains, and energy products.
This Indonesia-US trade deal could signal stronger ties ahead, but uncertainty around U.S. trade policy still poses serious risks for global businesses.
