Indonesia's Trade-War Preparations Led to Bilateral Tariff Talks With US

Competitiveness and access to the US market

Speaking in Jakarta on a Wednesday before Trump's inauguration, Santoso said Indonesia had long anticipated the risk of a US-China trade conflict. He compared the situation with Trump's previous term and argued that Indonesia needed to strengthen its ability to compete in goods and services to remain attractive to trading partners.

At the time, Trump had proposed tariffs of 100 percent for BRICS member countries and a 60 percent tariff increase on Chinese products. Those proposals raised the prospect of greater geopolitical tensions and disruptions to global supply chains after he took office.

Santoso said the government would also seek new ways to build economic ties with the United States and improve access to its market. Coordinating Minister for Economic Affairs Airlangga Hartarto had already outlined bilateral negotiations as a way to secure lower US tariffs and limit the impact of Trump's expected import policies.

Speaking on a Monday after the IBC Business Competitiveness Outlook 2025 event in Jakarta, Hartarto said a free-trade agreement was among the possible mechanisms. He also said the United States had begun imposing tariffs on Indonesian products, including apparel and commodities, in the run-up to Trump's scheduled inauguration as the 47th US president on January 20, 2025.

July framework set out tariff reductions

Trump announced a preliminary deal with Indonesia on July 15, 2025, saying Indonesian exports to the United States would face a 19 percent tariff rather than the threatened 32 percent rate. Indonesian President Prabowo Subianto confirmed their phone call but did not publicly confirm the tariff figure at that point, Reuters reported.

A joint statement issued July 22 established a negotiating framework for an "Agreement on Reciprocal Trade." Indonesia would remove tariffs on more than 99 percent of US goods and eliminate non-tariff barriers facing American companies, while Washington would lower its reciprocal tariff on Indonesian products to 19 percent. Negotiators were then expected to complete the agreement in the following weeks.

The framework also specified changes beyond tariff rates. According to Reuters, Indonesia agreed to recognize US Federal Motor Vehicle Safety Standards for vehicles exported from the United States and remove recently introduced pre-shipment inspection and verification requirements for US exports.

Indonesia also agreed to abandon planned tariffs on internet data flows and support renewal of the World Trade Organization's moratorium on e-commerce duties. Other commitments included lifting export restrictions on industrial commodities, including critical minerals, and joining the Global Forum on Steel Excess Capacity.

Purchase commitments and December negotiations

In October 2025, Hartarto said Indonesia had committed under the agreement to buy $15 billion in US energy products, $4.5 billion in US agricultural goods and 50 new Boeing aircraft, mainly Boeing 777s, ANTARA News reported.

US Trade Representative data cited by BSS/AFP in December put the US goods trade deficit with Indonesia at $17.9 billion in 2024, a 5.4 percent increase from the previous year.

On December 22, 2025, Hartarto said the two governments had settled all substantive issues in the "Agreement on Reciprocal Tariff" document. His comments followed a meeting with US Trade Representative Jamieson Greer in Washington. He said the United States had granted exemptions for key Indonesian products, including palm oil, coffee and tea, according to BSS/AFP.

At that stage, officials planned to resume negotiations in January 2026 to address legal issues. Prabowo and Trump were expected to sign the agreement before February 2026.