US officials announced that Donald Trump has reached a tariff deal with Indonesian President Prabowo Subianto. According to the new agreement, the Trump administration cut the tariffs on Indonesia from 32% to 19%. The US president stated that the relaxation of tariffs is granted for full access to American firms. The Indonesian leader took to Instagram to announce that the recent deal with the US marked a new era of mutual benefit between the two nations. Prabowo accepted that Trump was quite a tough negotiator.
The agreement is the latest to emerge after Washington announced a series of tariffs this spring, sparking a flurry of trade discussions over the duties. Earlier this year, Trump suspended his most aggressive tariff plans, but this month, he renewed his threats by sending warning letters to several countries, indicating that he planned to impose high tariffs starting August 1. Trump’s targets included all of the US’s major trade allies, including the European Union, South Korea, Canada, Japan, and Mexico.
The Indonesian government also received a letter from Trump last week, which outlined plans for a 32% tariff on its goods. On Tuesday, President Trump announced that he had cut the tariff rate after a conversation with the Indonesian president on a phone call. Furthermore, he stated that as part of the agreement, the Southeast Asian country had agreed to reduce its trade tariffs on products from the United States, which the Trump administration had complained were high for many agricultural products and certain other manufactured goods.
What will Indonesia pay?
Trump said that the Indonesian government is going to pay nineteen percent, and the US is going to pay nothing, and they will have full access to Indonesia. Additionally, the country has agreed to buy $15 billion worth of US energy, $4.5 billion in American agricultural products, and 50 Boeing jets. Those stats are lower than those mentioned in the trade pact Reuters had reported earlier this month was projected to be signed.
Prabowo stated that Indonesia needs planes, and the US is willing to sell. Boeing is a good option, and its administration will also continue to work with Airbus. He added that they also require certain items, such as wheat, fuel, and other goods. The Indonesian president didn’t directly say whether American goods would enter Indonesia with zero percent tariffs, but he said that he negotiated everything with the US president.
Indonesia stands among the US’s top 25 trade allies, sending around $28 billion to the US last year, including palm oil, footwear, and clothing. Stephen Marks, economics professor at Pomona College in California, said the benefits of the trade agreement to Indonesia are more political than economic. He stated that the United States has some major import categories from Indonesia, although not at a level greater than some of its Asian trading partners.
The Indonesian government has announced deals with just China, Vietnam, and the United Kingdom. In all three cases, the agreements left high American tariffs in place while major issues and terms remained unsettled and unverified.
