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Indonesia-US Trade Deal Slashes Tariffs, Boosts Exports
20 Feb
Summary
- U.S. tariffs on Indonesian goods cut to 19% from 32%.
- Over 1,800 Indonesian commodities, including palm oil, are tariff-exempt.
- Indonesia commits to significant imports and investments from the U.S.
Indonesia and the United States have concluded a comprehensive trade agreement after nearly a year of negotiations, significantly reducing U.S. tariffs on goods from Southeast Asia's largest economy. The finalized deal slashes import levies to 19% from the previous 32%.
Key provisions include tariff exemptions for over 1,800 Indonesian export commodities, encompassing vital products like palm oil, coffee, and cocoa. Conversely, Indonesia will eliminate tariffs on more than 99% of U.S. products entering its market. The agreement also addresses non-tariff barriers and facilitates cooperation in critical minerals, including rare earths.
Furthermore, Indonesia has committed to importing goods and services valued up to $38.4 billion from the U.S., with substantial allocations for energy and agricultural products. The nation will also facilitate a minimum of $10 billion in direct investment toward U.S. projects. Investor protections are enhanced, with eased restrictions on U.S. business ownership and divestment requirements.
Areas of digital trade and bioethanol use are also covered. Indonesia will communicate with the U.S. on new digital trade agreements and refrain from imposing discriminatory digital services taxes. By 2030, Indonesia aims to incorporate up to 10% bioethanol into its transportation fuel.
The agreement also aligns national security interests, with Indonesia agreeing to take measures that support U.S. trade policies and combat trade circumvention.
