President Donald Trump said yesterday that the United States had struck a trade agreement with Indonesia under which Washington would impose a 19 percent tariff on its imports.
“Great deal, for everybody, just made with Indonesia. I dealt directly with their highly respected President. DETAILS TO FOLLOW!!!” Trump said in a post on his social media platform Truth Social yesterday morning.
He later told reporters that the U.S. would impose a 19 percent tariff on Indonesia’s imports, while Jakarta had agreed to remove all of its tariffs on American goods, adding that more deals with major U.S. trading partners were in the works. According to Trump, it would be Indonesia that pays the tariff, rather than U.S. importers, although Trump has long made this claim about tariffs in contexts where it was not actually true.
“They are going to pay 19% 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,” Trump said outside the Oval Office, Reuters reported.
In addition, Trump said in a separate Truth Social post that Indonesia had agreed to buy $15 billion of U.S. energy products, $4.5 billion of American farm products, and 50 Boeing jets – seemingly part of the $34 billion deal that Indonesian officials announced earlier this month.
“Thank you to the People of Indonesia for your friendship and commitment to balancing our Trade Deficit,” he wrote. “We will keep DELIVERING for the American People, and the People of Indonesia!”
The 19 percent tariff represents a significant reduction on the 32 percent tariff that Trump imposed on Indonesia during his “Liberation Day” tariff announcement in April, in a bid to reduce the $17.9 billion U.S. trade deficit with Indonesia.
The 32 percent rate was subsequently reaffirmed in a letter to President Prabowo Subianto last week, which Trump said would come into effect on August 1, the latest deadline that the Trump administration has set for the imposition of its severe “reciprocal tariffs.” The total U.S. goods trade with Indonesia totaled around $38.3 billion in 2024, according to the U.S. Trade Representative’s Office.
While Indonesia does not crack the top 15 U.S. trade partners, the United States is its second-largest export partner, and since April, Indonesian officials have worked with U.S. counterparts to negotiate a deal that would reduce (or remove) the reciprocal tariff. The country’s main exports to the U.S. are palm oil, electronics equipment, footwear, car tires, natural rubber, and frozen shrimp, according to data from the U.S. Census Bureau cited by Reuters.
The purported Indonesia agreement is among the handful struck so far by the Trump administration ahead of the August 1 deadline. In fact, the announced deal is similar to the deal with Trump claimed to have struck with Vietnam earlier this month. This was also announced in a Truth Social post, which stated that Hanoi had agreed would involve a 20 percent tariff “on any and all goods” exported to the U.S. It also included a penalty on transshipped goods – those that pass through Vietnam to circumvent steeper trade barriers – which Trump said would be hit with a 40 percent tariff. Trump said that an extra (unspecified) tariff would also apply to Indonesian imports believed to be transshipped from China, although in neither case is it clear how the provenance of imports will be determined, or by whom. Trump’s statement that Indonesia will bear the costs of the 19 percent tariff also raises a host of questions.
So chaotic has this process of negotiation been, and so vague the announcements by Trump, that it is hard to know if these agreements are final and binding, or whether the August 1 deadline might be extended further. A report published by Politico Pro last week claims that Trump increased the tariff rate agreed with Vietnam “at the last minute.” The report, which cited “four people familiar with the discussions,” said that while Vietnamese state media confirmed that a deal had been reached, “neither side has released documentation of those terms, raising questions about whether they did, in fact, reach an agreement.”
While Trump said on Truth Social that the agreement with Indonesia was “finalized,” Jakarta has not yet made any official announcements of the deal. Susiwijono Moegiarso, a senior official in Indonesia’s Coordinating Ministry for Economic Affairs, told Reuters that his ministry was “preparing a joint statement between U.S. and Indonesia that will explain the size of reciprocal tariff for Indonesia including the tariff deal, non-tariff and commercial arrangements. We will inform (the public) soon.” The Jakarta Post also cited one former official who said that government insiders had “indicated they were happy with the new deal.”
For the Trump administration, which has promised the American people advantageous trade deals, there is an obvious need to wrap up as many agreements as possible prior to the August 1 deadline, even if the details are left to be filled in later.
In any event, the whole affair is likely to make trading partners, including in Southeast Asia, prioritize the diversification of their trade relations away from the U.S., and toward more reliable and like-minded partners. This rationale underpins the conclusion this week of the Indonesia-EU Comprehensive Economic Partnership Agreement, which is now expected to be signed in the third quarter of the year.