New Era in US-Indonesia Relations After Tough Trade Negotiations

President Donald Trump has unveiled a new trade agreement with Indonesia, dramatically altering tariff terms between the two countries. The announcement coincided with the anticipated impact of new US tariffs on Jakarta.

The headline term: tariffs on Indonesian goods exported to America will drop from 32% to 19%. In exchange, the US secures “full access” to the Indonesian market and promises of high-dollar American imports.

What’s in the deal for each country?

The White House said the deal includes Indonesia agreeing to purchase $15 billion in US energy, $4.5 billion in agricultural goods, and 50 Boeing aircraft. Trump touted the agreement as a model for more bilateral trade pacts.

Indonesian President Prabowo Subianto confirmed broad agreement on trade but avoided full specifics. Speaking in Jakarta, he emphasized national interest: “We need airplanes. They want to sell. Boeing is quite good,” he said.

He added that Indonesia would continue to work with both Boeing and Airbus, keeping options open while securing essential imports like soybeans, wheat, fuel, and natural gas.

Did you know?
Indonesia is the world’s largest palm oil producer, with much of its exports used in American cosmetics and food products despite ongoing environmental concerns.

Behind the scenes: letters, threats, and calls

Just a week ago, Indonesia received a letter from Trump warning of incoming 32% tariffs. That prompted an urgent call between both presidents, a move that appears to have reset the trajectory of the talks.

The conversation reportedly focused on access for US producers in agriculture and energy, sectors where the Trump administration says Indonesia has historically imposed steep import barriers.

A compromise was struck. Trump claimed on social media that US firms would now operate freely across Indonesia as part of the agreement.

Experts: Political win, economic caution

Trade analysts praised the announcement as a short-term win for diplomacy but said it remains unclear how enforceable or balanced the commitments are. “This is more about politics than numbers,” said Pomona College professor Stephen Marks.

Marks noted that the US is a top 25 trade partner for Indonesia, but not as dominant as China, Japan, or some ASEAN neighbors. The promise of “full access,” if true, represents unusual openness in a region known for protectionism.

Indonesian exports to the US last year totaled $28 billion, including palm oil, electronics, apparel, and footwear. US complaints center on high Indonesian tariffs on processed goods and agriculture.

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A series of shifting deals worldwide

The announcement follows similar headline-making arrangements Trump has reached in recent months with Vietnam, the UK, and China. In each case, core structural disputes remain unresolved, but early-stage purchases and tariff relief dominate the messaging.

The settlement also fits an emerging strategy from Trump’s trade team: issue tariff threats, create negotiation urgency, and carve out relief for American interests without multilateral processes.

Notably, none of these deals restore full tariff-free trade. Instead, they often involve selective relief in exchange for direct US access or bilateral concessions involving American industry.

What happens next?

Everett Eissenstat, former Trump administration economic adviser, told reporters he expects more agreements to follow. “It’s a classic Trump move. Apply pressure initially, then proceed to negotiate a deal,” Eissenstat stated.

He also noted that leaders in nations like Canada, Japan, and Mexico appear to be lowering their expectations. “The tone is changing. There’s less resistance now, more focus on minimizing damage,” he said.

In Indonesia’s case, Prabowo said he prioritized protecting jobs and worker security, even if some purchases were “beyond what we can afford.” He continued, “We negotiated everything. We have our position.”

Expect more talks to evolve in the coming months. Industry groups in both nations want clarity. Agriculture and energy trade lobbies in Washington are eager to see operational details. In Jakarta, business groups remain cautious but hopeful.

This deal may mark a turning point or only the beginning of a new chapter. Either way, for the US and Indonesia, the message is clear: trade talks are no longer optional; they're the main event.