Indonesia and the United States have finalized a trade agreement that lowers U.S. tariffs on Indonesian goods from 32% to 19%, while granting Jakarta exemptions for palm oil and other major exports.
The agreement was signed in Washington by Indonesia’s senior economic minister Airlangga Hartarto and U.S. Trade Representative Jamieson Greer after months of negotiations.
Palm oil was a particularly important exemption, accounting for around 9% of Indonesia’s overall exports.
Indonesian coffee, cocoa, rubber and spices would also be tariff-free, Airlangga said.
Deal Comes After Trying Start To 2026
The 19% rate is on par with U.S. deals with Southeast Asian rivals such as Malaysia, Cambodia, Thailand and the Philippines. Vietnam, however, has a slightly higher rate of 20%.
Malaysia, another major exporter of palm oil, also has a tariff exemption for that product, as well as for cocoa and rubber.
The deal comes after a rough start to the year for Indonesian markets. Setbacks include last month’s warning from index provider MSCI that the equity market risked a downgrade to “frontier” status over transparency issues, as well as Moody’s cutting of the country’s credit rating outlook two weeks ago that cited reduced predictability in policy making.
Indonesia To Accept Us Product Standards
Under the deal, Indonesian textiles will enjoy a 0% levy under a quota tied to U.S. material use, while Washington dropped demands on nuclear and South China Sea issues.
In return, Jakarta will cut tariffs on most U.S. goods, ease non‑tariff barriers, and adopt American standards on vehicles, medical devices, and pharmaceuticals.
Deal To Help Us Interests In Critical Minerals
The deal also appears to take aim at what analysts have said are concerns in Washington about China’s stranglehold on many critical minerals and the offshoring of Chinese companies’ operations to countries like Indonesia.
Under the agreement, Indonesia will implement restrictions on ‘excess production’ by foreign-owned mineral processing facilities by ensuring production conforms to Indonesian mining quotas. Such minerals include nickel, cobalt, bauxite, copper and manganese.
Jakarta has also agreed to take action against companies owned or controlled by foreign countries operating within its jurisdiction when their practices harm U.S. trade interests.
(With inputs from Reuters)
