Indonesia–US Trade Agreement Establishes 19% Tariff Rate

Indonesia secures a 19% US tariff cap, avoiding a 32% hike, amid commitments on Boeing purchases, energy, agriculture, and enforcement measures, positioning it favorably in US trade policy. Indonesia’s strategic negotiations underscore its growing influence in international trade.

Commitments to Boeing purchases signal Indonesia’s dedication to bolstering its aviation sector, while agreements on energy and agriculture pave the way for expanded bilateral cooperation. Additionally, enhanced enforcement measures demonstrate Indonesia’s resolve to align with global trade standards, further solidifying its favorable position in U.S. trade policy.

Indonesia’s Favorable Trade Deal with the U.S.

Indonesia has emerged as the most favorably treated Southeast Asian nation under the U.S.’s new protectionist trade policies, thanks to a breakthrough agreement that caps tariffs on Indonesian exports at 19 percent. Signed in July 2025, the deal prevents a potential 32 percent tariff hike, giving Indonesian exporters much-needed relief and stability amid shifting global trade tensions.

Key Terms and Commitments

The agreement establishes a consistent 19 percent tariff rate on Indonesian goods, lower than the proposed 32 percent. In exchange, Indonesia has pledged to purchase 50 Boeing aircraft over several years and import US$15 billion worth of U.S. energy, along with US$4.5 billion in agricultural products. It also includes enforcement measures to prevent rerouting of goods from other countries, notably China, ensuring fair trade practices.

Strategic Implications and Future Outlook

While the tariff rate provides certainty, it still increases costs for Indonesian exporters. The deal encourages bilateral dialogue on digital trade and supply chains while requiring Indonesia to enforce rules of origin and combat rerouted goods—protecting domestic markets and foreign investment. This strategic trade alignment bolsters Indonesia’s position in regional and global markets.

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