Indonesia celebrates new era with US after Trump trade pact
Indonesia and the United States Unlock a New Trade Chapter
President Prabowo Subianto hailed a “new era” in trade ties after the United States reduced the tariff paid by Indonesia from 32% to 19%.
Key Highlights
- Prabowo’s Instagram post celebrated a “very good” phone call with President Donald Trump, yet no specific details were shared.
- Hasan Nasbi, the President’s spokesman confirmed the new 19% rate and emphasized the negotiation was “extraordinary,” describing it as a “progress that cannot be called small.”
- Trump’s statement stressed the pact was achieved after significant purchase commitments from Jakarta, including a plan to buy 50 Boeing jets.
- In exchange for the lower tariff, Indonesia pledged to invest billions in energy, agriculture and the import of U.S. merchandise.
Background Context
Since Trump’s first administration in 2016, the two leaders have cultivated a warm rapport. Trump lifted a de‑facto visa ban for Prabowo and invited him to Washington in 2020 while he served as Indonesia’s defence minister. The United States secured a better tariff than the 20% promised to Vietnam, another critical market for Chinese goods transshipment.
Risk Assessment
Experts warned the 19% tariff on Indonesian exports could pose a significant danger to Indonesia’s trade balance. Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies, urged the country not to rely too heavily on U.S. exports, citing the negotiation’s still‑detrimental impact on Indonesia’s position.
Data Snapshot
The U.S. Trade Representative office reports a U.S. goods trade deficit with Indonesia of $17.9 billion in 2024, marking a 5.4% increase from the previous year.
