WASHINGTON:
In order to secure large-scale purchases of American goods, US President Donald Trump announced a comprehensive new trade agreement with Indonesia on Tuesday. The deal is being hailed as a significant diplomatic and economic victory for both countries and comes after high-level talks with Indonesian President Prabowo Subianto.
Under the deal, tariffs on Indonesian exports to the United States will be reduced to 19 per cent—down from a proposed 32 per cent. In return, Indonesia has committed to buying US$15 billion worth of American energy products, 50 Boeing aircraft, and an additional US$4.5 billion in agricultural commodities.
In a statement posted on his social media platform Truth Social, President Trump described the outcome as “a fantastic agreement that opens the doors of Indonesia to American energy, aviation, and agriculture like never before.” He also claimed the deal would provide “complete and total access” for US goods and services to the Indonesian market.
The Indonesian government confirmed the agreement late Tuesday. Hasan Nasbi, spokesperson for President Prabowo, said the deal was reached after an “extraordinary struggle” led by Coordinating Minister for Economic Affairs Airlangga Hartarto. Nasbi added that the outcome was favourable, particularly considering the tariff pressure on other countries in the region. “This is a meeting point. The negotiation process was complex, but it has protected Indonesia from the worst impact,” he said.
President Trump’s administration had set a 1 August deadline for reciprocal trade negotiations with several countries, warning of high tariffs on those that failed to reach agreements. One of the first countries to obtain a resolution by this deadline is Indonesia.
The Trump administration's new trade agreement is also viewed as a calculated attempt to offset Chinese economic hegemony in Southeast Asia. In order to stop Chinese goods from evading US tariffs, the US will keep a close eye on any transshipment of Chinese goods through Indonesia as part of the agreement.
Market reactions in Indonesia were largely positive. The Jakarta stock exchange rose by 0.7 per cent following the announcement, with notable gains in the energy and agriculture sectors. Matt Simpson, senior market analyst at City Index, remarked, “Well, 19 per cent is better than 32. This outcome offers breathing space for Indonesia’s exporters and a big boost for American manufacturing and energy.”
While the full text of the agreement is yet to be released, both governments have confirmed that formal signing ceremonies are expected within days. A press conference by President Prabowo is also anticipated upon his return from a regional economic summit.
The deal marks one of the most significant bilateral agreements reached during President Trump’s second term, with further announcements expected as the 1 August deadline approaches.
