The White House on Thursday announced that the US President Donald Trump’s administration and the Indonesian government have finalised an agreement to lower US tariffs on the Southeast Asian country to 19% from 32%.
As per the new deal, Indonesia will cut trade barriers on more than 99% of US imports and facilitate more than $30bn (£22.3bn) of purchases of American goods. It will also grant tariff exemptions on some Indonesian goods, including certain clothing and textiles that are produced with cotton and man-made materials from the US.
Jamieson Greer, US trade representative, said the agreement will “break down trade barriers” while advancing the interests of the American people.
The new trade agreement between the two countries came during a visit to Washington by Indonesia’s President Prabowo Subianto to attend the first meeting of the Trump-led “Board of Peace” to discuss the reconstruction of Gaza.
Airlangga Hartarto, Indonesia’s coordinating minister for economic affairs, said the finalised deal is beneficial to both sides and will attract greater investment in Indonesia. About 90% of Indonesia’s requests on tariff terms were accepted by the US, Airlangga said.
“The vision of this agreement is mutual economic prosperity, strong supply chains, and respect for each country’s sovereignty,” he told reporters in Washington.
As part of the deal, Airlangga added, Indonesia has secured tariff exemptions for more than 1,700 goods, including coffee, spices, chocolate, natural rubber and, notably, its top export product, palm oil. It comes in exchange for Indonesia opening up its markets to American products, such as by accepting US standards on car safety, emissions, medical devices and pharmaceuticals, the White House said.
Besides committing to buying billions of dollars of US goods- including cotton, soy, beef, Boeing jets and energy- Indonesia will also lift trade barriers on American imports, including agriculture, healthcare, seafood, technology and car-related products.
The Southeast Asian country will also facilitate US firms in developing its rare earths infrastructure, which will help Washington expand its supply of critical minerals. The deal is set to take effect in 90 days, and changes could still be made to the terms if both countries agree, Airlangga said.
A slew of deals worth $38.4bn for partnerships in mining, technology, textiles and other industries were signed on Wednesday between Indonesian and US companies. The deals came as part of the tariff agreement, Prabowo said, and they will help Indonesia to reduce its trade surplus with the US.
During a dinner hosted by the US Chamber of Commerce on Wednesday, he further added, “I’m very optimistic about the future of our relationship.”
