Indonesia Lands U.S. Trade Win While Courting the EU

Indonesia Secures a Trade Agreement with the U.S.

In a deal announced by President Trump and confirmed by Indonesian President Prabowo Subianto, the U.S. has agreed to reduce its tariff on Indonesian goods from 32% to 19%. In exchange, Indonesia committed to a range of major purchases from the U.S., including:

• $15 billion in U.S. energy exports
• $4.5 billion in American agricultural products
• 50 Boeing jets, many reportedly 777s

Trump characterized the deal as granting “full access” to U.S. exporters, claiming that Indonesia would not impose tariffs on American goods, though Indonesian officials did not confirm the full extent of this tariff elimination.

President Prabowo described the negotiations as an "extraordinary struggle," underscoring the efforts of Indonesia's economic team. He emphasized that the agreement marks a “new era of mutual benefit” between the two nations. The announcement followed weeks of heightened uncertainty after the U.S. abruptly announced a 32% tariff on Indonesian imports in April, as part of President Trump’s broader reciprocal tariff strategy to reduce trade deficits. The 32% tariff had been slated to take effect on August 1; however, the timeline for implementing the revised 19% rate remains unclear.

The agreement comes against the backdrop of the following U.S. trade relations with Indonesia –

• Indonesia is the U.S.’s 24th largest trading partner, with bilateral trade totaling $38.3 billion in 2024.

• The U.S. ran a $17.9 billion trade deficit with Indonesia last year.
• Indonesian exports to the U.S. include apparel, footwear, palm oil, and copper. 

Indonesia Actively Seeks a Trade Deal with E.U.

Simultaneously, Indonesia is accelerating trade talks with the European Union. President Prabowo and European Commission President Ursula von der Leyen recently agreed to finalize the Indonesia – E.U. Comprehensive Economic Partnership Agreement (CEPA) by September.

Under the expected terms:

• 80% of Indonesian exports to the EU would see tariffs eliminated within one to two years of implementation.
• The agreement could increase Indonesian exports to the EU by 58% within three years and boost GDP by 0.19 percentage points.

This E.U. agreement comes as part of Indonesia’s broader strategy to diversify export markets in response to Trump’s protectionist policies and highlights a growing pivot among ASEAN nations toward alternative trade partners.

 

At Allyn International, we are committed to supporting the global trade community with strategic, forward-thinking solutions to help navigate today’s complex tariff landscape. Whether you have questions about tariffs, trade agreements, or would like to explore strategies to reduce their impact on your business operations, our team is here to help. Contact us today for a consultation at sales@allynintl.com, call 239-489-9900, or reach out here.

Contributor: Rebecca Anderson

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