UNLOCKING RECIPROCAL TRADE: President Donald J. Trump has unveiled a significant trade agreement with Indonesia, a deal poised to grant American businesses access to markets in Indonesia that previously seemed out of reach. This pact aims to catalyze advancements across America’s manufacturing, agricultural, and digital sectors.
- As part of this agreement, Indonesia will impose a reciprocal tariff rate of 19% on U.S. goods.
- The core elements of the U.S.-Indonesia Agreement on Reciprocal Trade include:
- Elimination of Tariff Barriers: Indonesia will abolish tariff barriers on over 99% of U.S. exports across all sectors, including agriculture, health products, seafood, information and communications technology, automotive goods, and chemicals. This move aims to create significant market access opportunities for American exports, bolstering high-quality jobs in the U.S.
- Reducing Non-Tariff Barriers for U.S. Industrial Exports: The agreement mandates that Indonesia tackle various non-tariff barriers by: (1) exempting U.S. companies from local content requirements; (2) accepting vehicles that meet U.S. safety and emissions standards; (3) recognizing FDA certifications for medical devices and pharmaceuticals; (4) easing certification and labeling requirements for cosmetics and manufactured goods; (5) lifting restrictions on remanufactured goods; (6) eliminating unnecessary pre-shipment inspections; (7) adopting good regulatory practices; (8) resolving long-standing intellectual property disputes; and (9) addressing conformity assessment concerns.
- Facilitating U.S. Agricultural Exports: Indonesia will remove barriers to U.S. agricultural products by: (1) exempting U.S. food and agricultural items from import licensing rules; (2) ensuring fairness in geographical indications for meats and cheeses; (3) granting permanent Fresh Food of Plant Origin designations for applicable U.S. plant products; and (4) acknowledging U.S. regulatory oversight for meat, poultry, and dairy facilities.
- Strengthening Rules of Origin: Both nations will negotiate rules of origin to ensure that the benefits of the agreement are enjoyed exclusively by the U.S. and Indonesia, rather than third-party countries.
- Enhancing Digital Trade: The U.S. and Indonesia will solidify commitments regarding digital trade, services, and investment. Indonesia has agreed to eliminate tariffs on intangible goods, support a moratorium on customs duties for electronic transmissions, and recognize U.S. data protection standards.
- Aligning on Economic Security: Indonesia is set to join the Global Forum on Steel Excess Capacity to tackle global steel overcapacity issues. The two countries will enhance cooperation to bolster supply chain resilience and remove export restrictions on industrial commodities, including critical minerals, bound for the U.S.
- Advancing Labor Standards: Indonesia has pledged to implement a ban on imports produced with forced labor and to enhance workers’ rights to organize and bargain collectively.
- Commercial Collaborations: The agreement will also facilitate commercial deals in agriculture, aerospace, and energy, further boosting U.S. exports to Indonesia.
- President Trump asserts that this forward-thinking trade deal will benefit American workers, exporters, farmers, and digital innovators—an embodiment of victory for the American public.
A CLEAR PATH FORWARD: In the forthcoming weeks, the U.S. and Indonesia will formalize the Agreement on Reciprocal Trade to ensure lasting benefits for American businesses and workers.
- Currently, the United States faces its fifteenth largest goods trade deficit with Indonesia, amounting to $17.9 billion in 2024.
- Prior to this agreement, Indonesia’s average applied tariff was 8%, compared to the U.S. average of 3.3%.
FREEDOM FROM UNFAIR TRADE PRACTICES: Since taking office, President Trump has challenged the notion that American workers and businesses need to endure unfair trade practices that have historically disadvantaged them and contributed to a significant trade deficit.
- On April 2, President Trump declared a national emergency in response to the persistent U.S. goods trade deficit, citing the lack of reciprocity in trade relationships and unfair tariff and non-tariff barriers.
- President Trump continues to advocate for the economic and national security of the American populace by dismantling barriers and expanding market access for U.S. exporters.
- This latest announcement underscores the potential for America to defend its domestic production and enhance its defense industrial base while gaining substantial access to international markets.
