Customs agreement between Indonesia and the USA

In July 2025, after massive pressure, the United States and Indonesia reached an agreement on high tariffs. This "tariff deal" represents a milestone in bilateral economic relations – with far-reaching consequences for trade, industry, and geopolitics.

1. Background and initial situation

In April 2025, US President Donald Trump threatened to impose a 32% tariff on Indonesian exports, thereby acting within the framework of his national emergency powers option to combat trade imbalances. This threat was part of a broader policy that uses tariffs as a tool of strategic diplomacy.

2. The key points of the agreement

a) Tariff regulations

• Indonesia will henceforth pay a 19% tariff on its exports to the USA – significantly less than the threatened 32%, but more than previously customary (previously a base tariff of about 10%).

• In return, customs duties on US goods to Indonesia are almost completely eliminated: Over 99% of US exports are imported duty-free.

b) Non-tariff trade barriers

Indonesia commits to eliminating comprehensive non-tariff barriers (NTBs) for US suppliers:

• Abolition of pre-shipment inspections, especially for agricultural products.

• Recognition of US regulations: for example, for vehicles (safety and emission standards), FDA approvals for drugs, cosmetics, etc.

• Free market access for US agricultural products, including exemptions from import licenses, protection of geographical indications of origin, and recognition of US certificates.

c) Critical Minerals & Investments

• Indonesia lifts export restrictions on critical minerals (e.g. nickel, copper) – a strategic gain for US industry, especially the steel and high-tech sectors.

• The deal also includes specific large purchases : Indonesia agrees to acquire 50 Boeing aircraft , US agricultural products worth USD 4.5 billion and US energy for USD 15 billion .

d) Other obligations

• Digital trade : Indonesia supports the WTO moratorium on digital tariffs, facilitates the flow of personal data, and commits to fair rules for services and investments.

• Labour rights : Introduction of a ban on imported goods produced through forced labour and recognition of international labour rights.

• Steel sector cooperation : Indonesia joins the Global Forum on Steel Excess Capacity (GFSEC) and aims to combat overcapacity in the steel sector.

3. Perspectives and Assessments

a) USA: Political and economic benefits

• Trump praised the deal as a "huge win" for US manufacturers, farmers and technology companies.

• He strengthened his government's trade agenda by opening markets and providing access to strategic raw materials.

b) Indonesian perspective & critique

• President Prabowo Subianto described the agreement as the beginning of a "new era" in the bilateral relationship.

• Criticism comes from civil society: The deal could undermine Indonesia's data sovereignty and impair development goals, particularly in the area of ​​industrial processing of clean technology.

• The pace and scope of the reforms also raise questions – not all commitments have yet been formally ratified in a treaty.

4. Outlook

The tariff deal is expected to be formalized in the coming weeks. It marks a turning point in trade policy: between resorting to tariffs and disarmament through negotiations. In the long term, its implementation and impact in Indonesia and the US will determine whether the deal has a lasting effect or only provides short-term relief.

In addition to the economic consequences, it remains to be seen how the deal will affect Indonesia's integration into regional economic blocs such as the CPTPP – especially as Indonesia aims to expand its role in the trans-Pacific region.

Conclusion

The customs agreement between the US and Indonesia, reached in mid-July 2025, is an ambitious and wide-ranging framework. It includes both far-reaching openings for US exports and strategic concessions on the part of Indonesia, particularly in the areas of commodity policy and regulation. While it promises mutual economic benefits, its implementation and long-term impact remain controversial – especially regarding social, technological, and political-environmental aspects.