On Tuesday, President Donald Trump announced a trade agreement with Indonesia, imposing a 19% tariff on its goods entering the U.S., a reduction from the previously threatened 32%.
The deal includes Indonesia’s commitment to purchase $15 billion in U.S. energy, $4.5 billion in agricultural products, and 50 Boeing jets.
U.S. exports to Indonesia will face no tariffs, granting American firms greater market access.
This agreement follows a similar deal with Vietnam and is part of Trump’s push to reduce the U.S. trade deficit, which stood at nearly $18 billion with Indonesia in 2024.
The Indonesia pact comes as the European Union prepares retaliatory tariffs on $84.1 billion of U.S. goods, including aircraft, whiskey, and cars, in response to Trump’s threat of a 30% tariff on EU imports starting August 1.
Trump’s tariff strategy, which includes a baseline 10% duty on most imports since April, has disrupted decades of global trade agreements, raising concerns about inflation and market instability.
Yale Budget Lab estimates U.S. tariff rates could reach 19.7% to 20.6%, the highest since 1933.
Letters outlining tariff rates for dozens of smaller countries are expected soon.
Trump’s administration has faced pressure to finalize trade deals before the August 1 deadline, when steeper duties are set to take effect.
While agreements with the UK, Vietnam, and an interim deal with China have been secured, progress with other nations, including India, remains ongoing.
The Indonesia deal also includes penalties for transshipments of Chinese goods, aiming to curb tariff evasion.
Trump indicated plans for tariffs on pharmaceuticals, starting low but potentially rising sharply to encourage U.S. manufacturing.
As global trade dynamics shift, the outcomes of these negotiations will shape economic relations.