Washington D.C. – The United States and Indonesia have finalized a trade agreement that will lower U.S. Tariffs on Indonesian goods to 19% from 32%, while Indonesia will eliminate tariff barriers on over 99% of U.S. Exports, according to a joint announcement on Thursday.
The deal, signed on Friday by Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto and U.S. Trade Representative Jamieson Greer, follows months of negotiations and represents a significant step in strengthening economic ties between the two nations. Hartarto stated the agreement will be formally consulted with the Indonesian DPR (People’s Representative Council).
“This agreement will be effective 90 days after the legal processes are completed by both sides,” Hartarto said during a press conference broadcast by the Presidential Secretariat.
Under the terms of the agreement, Indonesia has secured tariff exemptions for more than 1,700 goods, including key exports such as coffee, spices, chocolate, natural rubber, and palm oil. In return, Indonesia will open its markets to American products, adopting U.S. Standards for car safety, emissions, medical devices, and pharmaceuticals.
The White House stated the agreement will unlock more than $30 billion (£22.3 billion) in purchases of American goods. Specifically, Indonesia has committed to purchasing $15 billion in U.S. Energy products, $13.5 billion in Boeing aircraft-related goods and services, and $4.5 billion in U.S. Agricultural products.
The agreement also includes 11 memoranda of understanding (MoUs) covering various sectors, totaling approximately $38.4 billion (Rp648.19 trillion), signed on Wednesday. These include an agreement with Freeport-McMoran to extend mining operations in Papua.
According to Hartarto, the agreement is based on mutual benefit. “The philosophy of this agreement is that it must be a win-win. Beneficial for the people of Indonesia and the people of the U.S. We want to achieve a golden age for both countries, not just one country,” he said.
The deal builds on a reciprocal tariff initiative announced by the U.S. In April 2025. Indonesia reportedly submitted four formal requests in 2025, with approximately 90% of its requests being accepted by the U.S.
Shinta Kamdani, Chairman of the Indonesian Employers Association (Apindo), said the organization had been involved in the negotiations from the beginning, providing input from industry and facilitating communication with U.S. Businesses. Kamdani emphasized the importance of improving the ease of doing business in Indonesia to maximize the benefits of the agreement.
Directors from the Indonesian Textile Association (API) and the Indonesian Footwear Association (Aprisindo) indicated they would review the details of the agreement and its impact on their respective industries.
Economists are cautiously optimistic about the deal. University of Indonesia economist Telisa Falianty noted the agreement largely mirrors the situation from July 2025, when the U.S. Initially reduced tariffs. She stressed the importance of capitalizing on opportunities, particularly in sectors where Indonesia has a competitive advantage, and fostering business-to-business negotiations.
Falianty also cautioned about potential trade imbalances and the need to maintain a trade surplus. She highlighted the importance of a stable rupiah and the potential impact of the agreement on Indonesia’s current account deficit.
Muhammad Faisal, Executive Director of the Center of Reform on Economics (CORE), raised concerns about the exclusion of domestic content requirements (TKDN) for certain U.S. Products. He argued this could set a negative precedent and potentially lead other countries to demand similar exemptions, potentially hindering Indonesia’s industrialization efforts.
Faisal also pointed out that the tariff exemptions primarily focused on raw materials, such as palm oil, coffee, and cocoa, rather than higher-value-added products, potentially limiting the agreement’s overall impact on Indonesia’s economic development.
Dinna Prapto Raharja, an international relations expert, criticized what she described as a lack of diplomatic process in the negotiations, with decision-making concentrated in the hands of the heads of state. She argued that a more inclusive and transparent process, involving diplomats and experts, would have yielded a more favorable outcome for Indonesia.
The finalized agreement represents a significant development in U.S.-Indonesia trade relations, but its long-term impact will depend on effective implementation and ongoing efforts to address potential challenges and maximize mutual benefits.
