WASHINGTON – Former U.S. President Donald Trump has secured a new trade deal with Indonesia, aiming to sidestep steep tariffs set to take effect on August 1, 2025. The agreement, though with a relatively minor U.S. trading partner, comes amid mounting global tensions over Trump’s revived tariff regime and the threat of widespread retaliatory actions.
Under the deal, Indonesia will impose a flat 19% tariff on its exports to the U.S., nearly double the existing baseline of 10%, while U.S. goods entering Indonesia will be tariff-free. The pact also includes a clause to penalize transshipments of Chinese goods through Indonesia and a commitment to purchase select American products.
Trump, speaking outside the Oval Office, described the deal as a win for American trade. “They are going to pay 19%, and we are going to pay nothing,” he said, promising more similar agreements in the coming days.
On his social platform Truth Social, Trump later claimed Indonesia has agreed to purchase $15 billion in U.S. energy products, $4.5 billion in agricultural goods, and 50 Boeing aircraft. No time frame was provided for these purchases.
Despite not being among the U.S.’s top 15 trade partners, Indonesia’s trade with America has grown significantly, reaching nearly $40 billion in 2024. U.S. exports to Indonesia rose by 3.7%, while imports climbed 4.8%, resulting in an $18 billion trade deficit for the U.S.
Indonesia primarily exports palm oil, electronics, footwear, tires, natural rubber, and frozen seafood to the United States. A senior Indonesian official confirmed a joint statement is being prepared to outline the final terms of the agreement, including tariffs and other trade arrangements.
The deal follows Trump’s recent tariff threats to over two dozen countries. Letters were sent to trading partners, including Canada, Brazil, and Japan, proposing blanket tariffs ranging from 20% to 50%, and specifically targeting copper imports with a 50% duty.
Trump’s tariff plan, which has disrupted long-held global trade norms, is expected to raise the average U.S. tariff rate to 20.6%, the highest since 1933. Yale’s Budget Lab estimates this could slightly decrease to 19.7% due to shifts in consumption, but the impact on global markets remains significant.
While only a few trade deals have been reached — including with the UK, Vietnam, and an interim deal with China — Trump said that negotiations with India are “moving in the same direction,” suggesting similar terms might be on the horizon.
Meanwhile, the European Union is preparing a major retaliation if trade talks with the U.S. collapse. The European Commission has drawn up a list targeting $84.1 billion worth of American goods, including Boeing aircraft, cars, whiskey, and food products. These measures respond to Trump’s proposed 30% tariff on EU imports starting August 1.
EU trade chief Maros Sefcovic said European ministers are determined to protect their markets. “There is unprecedented resolve to defend EU businesses if negotiations fail,” he stated.
With the August deadline looming, global trade dynamics remain uncertain, as nations weigh their responses to the aggressive tariff policy coming from Washington.
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