Indonesia Reaches ‘Historic’ Trade Deal with US

Indonesia this week reached a “historic” trade agreement with the US, personally negotiated between President Prabowo Subianto and his US counterpart, with Indonesia agreeing to buy significantly more American products, MercoPress reported. 

According to the new deal, Indonesia will eliminate tariffs on US imports, while the US will reduce its tariffs on Indonesian goods from the threatened 32 percent to 19 percent. 

Part of the agreement consists of Indonesia committing to substantial purchases from the US, including $15 billion in energy, $4.5 billion in agricultural products, and 50 Boeing aircraft, valued at around $20 billion. 

The total value of Indonesia’s projected purchase is estimated at about $40 billion.  

Indonesia is among the US’ top 25 trade partners, exporting about $28 billion worth of goods last year, including clothing, footwear, and palm oil. 

In turn, the agreement will grant the US “full access” to the Indonesian market, according to US President Donald Trump, specifically referring to Indonesia’s abundant copper resources.  

American ranchers, farmers, and fishermen will also have full access to Indonesia’s market of more than 280 million people. 

The new deal includes an anti-trade diversion clause, stipulating that if Indonesia behaves as an intermediary for countries facing higher US tariffs by allowing the rerouting of goods through Indonesia to avoid import taxes, those tariffs will still apply to the transaction. 

Prabowo wrote on Instagram that the deal marked a “new era of mutual benefit” with Washington, adding that Trump was “quite a tough negotiator,” the BBC noted. 

The deal is the latest following Trump’s move this spring to institute tariffs on most US trade partners. After postponing his most aggressive tariff plans, Trump this month renewed his threats, sending warning letters to dozens of countries that he intended to start charging high tariffs from Aug. 1. 

With this deal, Indonesia became the fourth country to make a trade agreement with the Trump administration in recent months, following the United Kingdom, Vietnam, and China.