Indonesia signs trade deal with Trump admin, tariffs slashed to 19%

Indonesia and the United States have signed an agreement on reciprocal trade, with Washington maintaining the 19 per cent tariff it had previously agreed for goods exported by the Southeast Asian country, Indonesia said on Friday.

 

The signing of the agreement by Indonesia's senior economic minister Airlangga Hartarto and US Trade Representative Jamieson Greer followed months of negotiations, after Washington last year agreed to lower Indonesia's exports to the United States to 19 per cent, down from an initial rate of 32 per cent. 

 

"This deal respects the sovereignty of both countries," Airlangga said from Washington during an online press conference with Indonesian media, describing the deal as a "win-win" for both countries. 

 

Indonesian coffee, chocolate, natural rubber and spices would be tariff-free, the Jakarta government said in a statement, adding it may also get exemptions for nearly 1,700 other commodities, including its top export product palm oil. 

 

Textile products from Indonesia will be subject to a 0 per cent levy under a "Tariff-Rate Quota" mechanism that will be discussed after the signing, Airlangga said.

 

During the negotiations, the United States had agreed to drop its requests to add non-economic provisions to the deal, including those related to nuclear reactor development and the South China Sea, Airlangga said.

 

The deal did not regulate trade that is categorised as transshipments from China because there is no such business conducted in Indonesia, he said.

 

Indonesia will remove tariff barriers on most US products across all sectors and address a range of non-tariff barriers such as local content requirements, according to a White House fact sheet about the agreement. It will also accept US product standards on vehicle safety, emissions, medical devices and pharmaceuticals.

 

Indonesia will also allow and facilitate US investment in critical minerals and energy resources under conditions that are similar to Jakarta's treatment of its own investors, the USTR said.

 

The deal takes effect 90 days after both sides complete the related legal procedures, but changes could still occur if both sides agree, Airlangga said.

 

President Prabowo Subianto has travelled to Washington for the deal and to attend the first leaders' meeting of US

President Donald Trump's Board of Peace. 

 

Prabowo and Trump on Friday signed a document titled "Implementation of the Agreement Toward a NEW GOLDEN AGE for the US-Indonesian Alliance" which the White House said "will help both countries to strengthen economic security, promote economic growth, and thereby continuously lead to global prosperity". 

 

Earlier this week, Indonesian and US companies had signed deals worth $38.4 billion.  

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