Indonesia Defends Zero-Tariff U.S. Farm Imports, Citing Economic Stability
Jakarta – Indonesia is moving forward with a plan to eliminate tariffs on select agricultural products from the United States, a move officials say is essential to maintaining stable consumer prices and ensuring a consistent supply of key commodities. Trade Minister Budi Santoso asserted Friday that the policy will not harm domestic industries, as the imported goods – including soybeans, wheat, and cotton – are primarily utilized as industrial raw materials not produced locally in sufficient quantities.
The decision comes as part of the Indonesia-US Agreement on Reciprocal Trade (ART), a deal formalized on February 19 in Washington, D.C., by President Prabowo Subianto, and U.S. President Donald Trump. According to Cabinet Secretary Teddy Indra Wijaya, both leaders described the agreement as ushering in a “new golden era” in the U.S.-Indonesia strategic partnership.
Santoso explained that removing tariffs is a strategic step to suppress import costs and production expenses, ultimately benefiting Indonesian consumers. “Lowering the cost of raw materials translates to more affordable finished goods,” he said. “Conversely, high input costs inevitably drive up food inflation.”
Indonesia relies heavily on the U.S. As its primary source of soybeans and a major supplier of wheat. These commodities are foundational to the nation’s food and beverage sector, serving as the primary ingredients for staples such as tofu, tempeh, and instant noodles. Securing a consistent supply of these goods is therefore vital for the Indonesian economy.
The policy aims to secure a consistent supply chain, stabilize market prices, and foster industrial resilience, according to the Trade Minister. He emphasized that imposing trade barriers on these essential commodities would only penalize domestic industries that rely on them as raw materials.
Coordinating Minister for Economic Affairs Airlangga Hartarto added that the policy is a vital safeguard for household purchasing power, preventing “inflationary shocks” on everyday food products. The zero-tariff framework established by the ART is intended to streamline bilateral trade flows for these specific agricultural goods.
The move to eliminate tariffs on U.S. Agricultural products is not expected to jeopardize domestic industries, officials maintain, because the imported commodities are largely used as inputs for manufacturing rather than competing directly with locally grown crops. The focus, they say, is on ensuring a stable and affordable supply of essential raw materials for Indonesian businesses and consumers.
