Fashion
US keeps 19% tariff as Indonesia slashes barriers under new trade deal
US President Donald Trump and Indonesian President Prabowo Subianto signed a document yesterday confirming their commitment to implement the pact in the coming weeks, subject to domestic procedures.
US and Indonesia have finalised a reciprocal trade agreement eliminating tariffs on over 99 per cent of US exports while the US maintains a 19 per cent reciprocal rate on most Indonesian goods.
The pact addresses non-tariff barriers, digital trade, steel overcapacity and labour standards, and includes $33 billion in commercial deals spanning energy, aerospace and agriculture.
Indonesia will also exempt US goods from local content rules, accept US federal motor vehicle safety and emission standards, recognise FDA standards for medical devices and pharmaceuticals, and remove pre-shipment inspection and labelling requirements, according to a White House fact sheet.
Indonesia has committed to eliminate barriers to digital trade, remove tariff lines on “intangible products”, and support a permanent WTO moratorium on customs duties on electronic transmissions. It will also ensure a level playing field for US electronic payment service providers.
Jakarta will join the Global Forum on Steel Excess Capacity and take steps to tackle global overcapacity. Both sides agreed to strengthen cooperation on supply chain resilience, duty evasion, export controls and investment security. Indonesia will lift export restrictions on industrial commodities, including critical minerals.
Additionally, Indonesia will exempt US food and agricultural products from its import licensing regimes and ensure transparency in geographical indications covering products such as meats and cheeses. It has also committed to adopt a forced labour import ban and amend labour laws to safeguard freedom of association and collective bargaining.
The two sides highlighted approximately $33 billion in commercial deals, including about $15 billion in US energy purchases, $13.5 billion in commercial aircraft and aviation goods—covering orders from Boeing—and over $4.5 billion in agricultural products.
Separately, Freeport-McMoRan signed an MoU to extend its mining licence and expand operations in the Grasberg minerals district, described as the world’s second largest copper mine. The project is expected to generate around $10 billion in annual revenue and strengthen US critical mineral supply chains.
The US recorded a $23.7 billion goods trade deficit with Indonesia in 2025, its 15th largest bilateral deficit. Prior to the deal, Indonesia’s simple average applied tariff stood at 8 per cent compared with 3.3 per cent in the US.
The administration said the agreement reflects a broader strategy to address non-reciprocal trade practices while securing expanded access for American exporters across manufacturing, agriculture and digital services.
Fibre2Fashion News Desk (KD)