By Ginika Igboke
Indonesia and the United States have finalized a trade agreement that reduces U.S. reciprocal tariffs on Indonesian imports to 19 percent and exempts certain products from duties, the White House announced on Feb. 19.
U.S. President Donald Trump had initially imposed a 32 percent reciprocal tariff on Indonesian imports in response to a $23.7 billion trade deficit recorded last year.
According to the White House, the newly reached agreement represents a “great deal” aimed at strengthening economic security and promoting growth in both countries.
Under the deal, certain Indonesian textile and apparel products made with U.S. cotton and man-made fiber inputs will enter the United States tariff-free, according to a White House fact sheet.
In exchange, Indonesia agreed to eliminate tariff barriers on more than 99 percent of U.S. goods across sectors including agriculture, health care, seafood, information and communications technology, automotive, and chemicals.
Indonesia also committed to addressing nontariff barriers by exempting U.S. goods from local content requirements, removing certain certification and labeling rules, and accepting U.S. standards for motor vehicle safety and emissions, medical devices, and pharmaceuticals.
As part of the agreement, Indonesia will purchase approximately $33 billion in U.S. energy commodities, commercial aircraft and aviation-related goods, and agricultural products, the White House said.
The deal was signed during Indonesian President Prabowo Subianto’s visit to Washington for the first leaders’ meeting of Trump’s Board of Peace.
“We have negotiated very intensively over the last few months, and I think we have reached solid understandings on many issues,” Prabowo told business executives at the U.S. Chamber of Commerce on Feb. 18.
U.S. Trade Representative Jamieson Greer said in a post on X that the agreement will provide U.S. agricultural and industrial companies access to Indonesia’s market of more than 280 million people.
In addition, Indonesian and U.S. companies reached 11 commercial agreements this week valued at $38.4 billion. The deals include purchases of U.S. soybeans, corn, cotton, and wheat; cooperation on critical minerals and oil field recovery; and joint ventures in semiconductor manufacturing.
Meanwhile, the United States recently finalized a similar trade agreement with Bangladesh, reducing reciprocal tariffs on Bangladeshi imports from 37 percent to 19 percent. The arrangement also provides tariff exemptions for certain textiles and apparel produced with U.S.-made materials.
Under that agreement, Bangladesh will grant significant preferential market access to U.S. industrial and agricultural goods, including chemicals, medical devices, machinery, motor vehicles and parts, information and communications technology equipment, energy products, soy, dairy, beef, poultry, tree nuts, and fruit, according to the White House.
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