Trump strikes trade deal with Indonesia, imposes 19% tariff on goods

US President Donald Trump announced on Tuesday a new trade deal with Indonesia that includes a 19 per cent tariff on all Indonesian goods entering the United States, while offering US exports full access to the Indonesian market, free of tariffs and other barriers.

The deal, finalised just ahead of an August 1 tariff hike deadline, is part of Trump’s broader push to reshape US trade relationships and reduce the nation’s sizeable trade deficit.

While Indonesia is not among the top 15 US trading partners, bilateral trade totaled nearly USD 40 billion in 2024 and has been steadily growing. Under the terms of the new deal, Indonesia has committed to purchasing USD 15 billion in US energy, USD 4.5 billion in American agricultural products, and 50 Boeing jets, many of them long-haul 777s.

Trump touted the deal as a major win for US farmers, ranchers, and exporters, claiming it would provide “complete and total access” to Indonesia’s 280 million-strong consumer market- a market that had previously been limited by high trade barriers. The average applied tariff rate in Indonesia, while officially listed at 37.1 per cent, was effectively around 5.7 per cent in 2024, according to World Trade Organization data.

In a Truth Social post Tuesday, Trump described the Indonesia agreement as a “landmark Deal”: Thank you to the People of Indonesia for your friendship and commitment to balancing our Trade Deficit. We will keep DELIVERING for the American People, and the People of Indonesia!”

Outside the Oval Office, Trump emphasised the imbalance the new deal aims to correct: “They are going to pay 19 per cent and we are going to pay nothing we will have full access into Indonesia, and we have a couple of those deals that are going to be announced.”

Indonesia had previously faced the threat of a 32 per cent blanket tariff set to take effect August 1, part of a broader tariff ultimatum Trump issued in letters to over two dozen countries this month, including Japan, Canada, Brazil, and India. The letters threatened new tariffs ranging from 20 per cent to 50 per cent unless agreements were reached to reduce trade imbalances.

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