Indonesia Announces Trade Agreement Following US Tariff Reduction

• The US reduced tariffs on Indonesian exports from 32% to 19%, boosting sectors like textiles, electronics, and palm oil 

• The move follows major US-Indonesian business deals, solidifying Indonesia’s role as a key trade partner

  
  

By Kenzie Aryasatya, Fayza Nawra Avanitanya, Muthia Noor Safitri, Imam Fakhri Prayogo Harianto 

July 18, 2025 at 16:30 GMT+7

The US has officially reduced tariffs on Indonesian exports from 32% to 19%, a significant recalibration in Washington’s trade policy that signals warming economic ties between the two nations. The reduction is expected to boost Indonesian exports to the US, especially in sectors such as textiles, electronics, and palm oil. 

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Though presented as a concession, the cut is widely viewed as a strategic adjustment within broader trade negotiations. Indonesian official Hasan Nasbi described the negotiation as an “extraordinary struggle,” noting the complexity and intensity of the discussions. 

As one of the most substantial tariff adjustments under the Trump administration, the announcement marks a pivotal moment in US-Indonesia relations, laying the groundwork for broader cooperation in both trade and diplomacy.

Indonesian Coordinating Minister for Economic Affairs meets with US Trade Representatives (07/09) | Source: Antara

The announcement followed a series of high-level business agreements that laid the groundwork for the deal. US and Indonesian companies signed major contracts across energy, infrastructure, and critical minerals, securing export commitments that include US$15 billion in energy, US$4.5 billion in agriculture,  and 50 Boeing aircraft. 

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The agreement also expands market access for American agriculture, with US exports of grains and other food products expected to rise. Aviation cooperation is also deepening, as aerospace firms enter broader partnerships to support manufacturing and joint innovation. 

These deals signal more than sector-specific growth; they represent a concerted effort to build a durable, strategic economic alliance. Together, the collaborations reflect broader efforts to establish a resilient, long-term economic partnership that supports mutual development and strengthens strategic ties.

Container truck at Tanjung Priok Port, following the announcement | Source: Reuters (Ajeng Dinar)

Indonesian officials have welcomed the US tariff cut as a strong signal of the country’s rising importance in global trade. The agreement is expected to support domestic industries, create jobs, and enhance the competitiveness of Indonesian exports in international markets. 

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As Washington seeks to diversify away from Chinese dependence, Indonesia is emerging as a preferred partner for trade, investment, and geopolitical alignment. Beyond short-term gains, the deal positions Indonesia for a larger role in global supply chains, particularly in strategic sectors such as critical minerals and technology. 

Officials also believe it will help attract more foreign direct investment by underscoring Indonesia’s commitment to open and strategic partnerships. It represents a step forward in the nation’s ambition to become a central player in shaping the future of regional and global trade.

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Source:

Antara

CNN

Reuters