Indonesia sees ‘bold' US trade deal, vows major tariff cuts
The government commits to a near-zero tariff for over 1,700 commodities or close to 70% of US imports, Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto said in a statement sent to Bloomberg News on Friday. These cover key sectors requested by the US, including electronics, machinery, chemicals, healthcare, steel, agriculture and automotive.
The sweeping deal could signal optimism as Southeast Asia's largest economy seeks to bring down a threatened 32% tariff rate to a level lower than the 20% Vietnam secured earlier this week. The US is Indonesia's second-largest export market, after China.
Still, Hartarto said the government remains in 'wait-and-see' mode for a final decision from Washington before the higher tariffs come into force on Wednesday.
The rupiah held steady at 16,180 against the US dollar following the news while the stocks maintained earlier loss of 0.2%.
'The market will look at the full picture to gauge the actual impact on Indonesia exports sector, as we need to compare the final US tariffs on different economies to know the change in competitiveness of export,' said Jeffrey Zhang, emerging market strategist at Credit Agricole in Hong Kong.
In the sector of critical minerals, 'plans include preferential access for US buyers, enhanced scrutiny of foreign ownership in the supply chain, and joint initiatives to ensure secure, transparent sourcing for key US industries,' Hartarto said.
The measures may make it easier for US firms to avoid buying from China-backed metals firms based in Indonesia, which is home to the world's largest reserves of nickel, a key component of batteries.
Indonesia will also ramp up its imports of US gas and agricultural goods, in a bid to boost the nation's food and energy security. State-owned airline PT Garuda Indonesia is also exploring commercial cooperation, which could include new aircraft purchases and maintenance services.
Meanwhile, the government plans to expand its procurement of US military equipment, 'reinforcing its position as a reliable defence partner in the Indo-Pacific.'
Indonesia pledged 'fairer treatment' for American firms by relaxing local content requirements, bolstering intellectual property protection, and opening the national payment gateway to US providers — key issues the US Trade Representative has regularly flagged in its yearly reports.
'The message is clear: Indonesia is pursuing a balanced, forward-looking economic relationship that yields tangible benefits for businesses and workers across both shores of the Pacific,' Hartarto said.
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