Indonesia and the U.S. have signed a new trade deal, with the U.S. maintaining a 19% tariff on goods exported by the Southeast Asian country.
Indonesian President Prabowo Subianto travelled to Washington D.C. for the agreement and to attend the first leaders’ meeting of U.S. President Donald Trump’s Board of Peace, responsible for the reconstruction of Gaza.
Indonesia said the country’s coffee, chocolate, natural rubber and spices would be tariff-free.
It also won an exemption for its top export, palm oil, which accounts for almost 10% of the country’s overseas shipments.
Textile products from Indonesia will be subject to a 0% levy under a tariff rate quota mechanism that is yet to be finalised.
The U.S. last year agreed to lower the duty on Indonesia’s exports to the U.S. to 19%, down from an initial 32%.
During the negotiations on the new deal, the U.S. 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.
According to a White House fact sheet about the agreement, Indonesia will remove tariff barriers on most U.S. products.
It will also address a range of non-tariff barriers, such as local consent requirements.
Indonesia will also accept U.S. product standards on vehicle safety, emissions, medical devices and pharmaceuticals.
Indonesia will also allow and facilitate U.S. investment in critical minerals and energy resources.
The deal takes effect 90 days after both sides complete the related legal procedures.
The U.S.’ aims to reduce its trade deficit with Indonesia with the new trade deal.
It currently runs its 15th largest goods trade deficit with Indonesia with a total goods trade deficit to the country at US$23.7 billion ($30 billion) in 2025.
