Indonesia and the US Conclude Trade Agreement After Intense Negotiations

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Indonesia has finalized a significant trade pact with the United States, reducing steep tariff proposals and laying the groundwork for stronger economic ties between the two nations.

After what officials described as an “extraordinary struggle,” Indonesia secured a reduction in proposed United States tariff rates on its exports from 32% down to 19%. Indonesian President Prabowo Subianto and United States President Donald Trump held direct discussions to finalize the terms before the August 1 deadline. Hasan Nasbi, spokesperson for the Indonesian president, praised the Coordinating Minister for Economic Affairs and the negotiating team for delivering a deal that places Indonesia on a more competitive footing compared to other Southeast Asian countries.

As part of the agreement, Indonesia committed to purchasing 50 Boeing aircraft, $15 billion in United States energy products, and $4.5 billion in agricultural goods, underscoring Jakarta’s interest in maintaining stable trade relations. Trump emphasized that the deal also includes measures to curb transshipment of goods originating from China, a practice Washington has long criticized.

The Jakarta stock index climbed by as much as 0.8% on the announcement, while Bank Indonesia, Indonesia’s central bank, moved to cut interest rates to bolster growth and reassure investors. Economists, including Myrdal Gunarto of Maybank Indonesia, noted that the arrangement delivers a tariff rate lower than those imposed on many regional peers, supporting exports in sectors such as agriculture and energy even as non-oil products like footwear and textiles are expected to face continued pressure.

Analysts cautioned that broader United States tariffs on Chinese products could still impact Indonesia’s economy due to its deep trade ties with China. Nevertheless, market experts like Matt Simpson from City Index described the outcome as a positive step that may encourage capital inflows and strengthen Indonesia’s financial stability.

While challenges remain, the agreement reflects Indonesia’s willingness to engage pragmatically with the United States, striking a balance between safeguarding its export interests and supporting American industries.