US sets 19 per cent tariff on Indonesia goods in deal
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US President Donald Trump says the United States will impose a 19 per cent tariff on goods from Indonesia under a new agreement with the Southeast Asian country.
He said more deals were in the works as he continued to press for what he views as better terms with trading partners and a path to reducing a massive US trade deficit.
The pact with the relatively minor US trading partner is among the handful struck so far by Trump’s administration ahead of an August 1 deadline for tariffs on most US imports to rise again, and it came as the top US trading partner – the European Union – readied retaliatory measures should talks between US and its top trading partner fail.
As that deadline approaches, talks were underway with other trading partners eager to avoid yet more levies being imposed on their exports to the US beyond a baseline 10 per cent on most goods that has been in place since April.
It is a policy regime – rolled out often chaotically by Trump – that has upended decades of trends toward lower trade barriers, often roiling global financial markets and economic activity along the way.
Based on Trump tariff announcements through July 13, Yale Budget Lab estimates the US effective average tariff rates will rise to 20.6 per cent from between 2 per cent and 3 per cent before Trump’s return to the White House in January.
Consumption shifts would bring the rate down to 19.7 per cent but it is still the highest since 1933.
Trump outlined an Indonesia deal that had rough contours resembling a pact struck recently with Vietnam, with a flat tariff on exports to the US roughly double the current 10 per cent and no levies placed on US exports going there.
It also included a penalty rate for so-called transhipments of goods from China via Indonesia, and a commitment to buy some US goods.
“They are going to pay 19 per cent and we are going to pay nothing … we will have full access into Indonesia, and we have a couple of those deals that are going to be announced,” Trump said outside the Oval Office.
In addition, Trump said later on his Truth Social platform that Indonesia had agreed to buy $US15 billion ($A23 billion) of US energy products, $US4.5 billion of farm products and 50 Boeing jets although no time frame for the purchases was specified.
Indonesia’s total trade with the US – totalling just under $US40 billion in 2024 – does not rank in the top 15 but it has been growing.
US exports to Indonesia rose 3.7 per cent last year while imports from there were up 4.8 per cent, leaving the US with a goods trade deficit of nearly $US18 billion.
The top US import categories from Indonesia, according to US Census Bureau data retrieved on the International Trade Centre’s TradeMap tool, last year were palm oil, electronics equipment including data routers and switches, footwear, car tyres, natural rubber and frozen shrimp.
Susiwijono Moegiarso, a senior official with Indonesia’s Coordinating Ministry for Economic Affairs, told Reuters in a text message: “We are preparing a joint statement between US and Indonesia that will explain the size of reciprocal tariff for Indonesia including the tariff deal, non-tariff and commercial arrangements. We will inform (the public) soon.”
Trump had threatened the country with a 32 per cent tariff rate effective August 1 in a letter sent to its president last week.
He sent similar letters to about two dozen trading partners this month, including Canada, Japan and Brazil, setting blanket tariff rates ranging from 20 per cent up to 50 per cent, as well as a 50 per cent tariff on copper.
The August 1 deadline gives the targeted countries time to negotiate agreements that could lower the threatened tariffs.
Some investors and economists have also noted Trump’s pattern of backing off his tariff threats.
So far, framework agreements have been reached with the United Kingdom and Vietnam, and an interim deal has been struck with China to forestall the steepest of Trump’s tariffs while negotiations continue between the two countries.
Trump said talks with India were moving in a similar direction.
“India basically is working along that same line. We’re going to have access to India. And you have to understand, we had no access into any of these countries. Our people couldn’t go in. And now we’re getting access because of what we’re doing with the tariffs,” he said.
Reuters
