The United States and Indonesia on Thursday finalized the terms of a framework trade agreement that would limit reciprocal tariffs on imports from Indonesia at 19%.
Agreement structure and implementation timeline
With terms formalized, the two countries must now conduct internal legal procedures to finalize the deal. The agreement would go into force 90 days after each country notifies the other that those processes are complete.
The agreement—labeled the U.S.-Indonesia Agreement on Reciprocal Trade—was first reached last July and signed by leaders of both countries on Thursday. Should the agreement be finalized, the U.S. will impose a 19% tariff on imports from Indonesia, while Indonesia will eliminate levies on 99% of U.S. exports.
Tariff reductions and product exemptions
As part of the agreement, the U.S. will remove levies for certain products from Indonesia in accordance with a November executive order that exempted over 200 agricultural goods. The U.S. further agreed to eliminate tariffs for other products, including some live animals, plants and chemical compounds. These tariff rates will be enforced in addition to the Most Favored Nation rate, per the agreement.
Additionally, the U.S. plans to establish a process to remove reciprocal tariffs for a “to-be-specified” volume of apparel and textile imports from Indonesia. The amount will be determined in relation to U.S. exports of similar goods to Indonesia.
U.S. export commitments and procurement targets
As part of a finalized agreement, Indonesia also would procure $4.5 billion of agricultural products—including soybeans, wheat and cotton—from the U.S., as well as $3.2 billion of aircraft and $15 billion of energy products.
The U.S. has finalized several provisions of a pact with the U.K., while a deal with China still requires approval from both countries. The Trump administration will continue discussions with Indonesian officials in the coming weeks to finalize the terms of the agreement framework.
Context on tariff adjustments
Imports from Indonesia would be subject to a 19% tariff under the agreement, a reduction from the 32% rate the president shared last week. Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto on Friday said the 32% tariff was being postponed as the U.S. and Indonesia continue negotiations over the next three weeks.
Hartarto’s comments came after a meeting with U.S. Commerce Secretary Howard Lutnick and U.S. officials. President Donald Trump unveiled the details of the deal just over a week after he began alerting world leaders, via mostly-identical letters, that new country-specific tariffs would begin in August.
Source: Supply Chain Dive
Compiled from international media by the SCI.AI editorial team.
