Indonesia says US trade deal reached after 'extraordinary struggle'
US President Donald Trump on Tuesday said a deal had been struck after he spoke to Indonesian President Prabowo Subianto. The deal is among only a handful reached so far by the Trump administration ahead of an Aug 1 deadline for negotiations.
"This is an extraordinary struggle by our negotiating team led by the Coordinating Minister for Economic Affairs," Hasan Nasbi, the Indonesian president's spokesperson, told reporters on Wednesday.
He added that the deal was 'progress that cannot be called small'.
Nasbi said Prabowo had also negotiated directly with Trump over the phone, without giving further details. He said Prabowo would hold a press conference to give additional details upon landing back in Indonesia after a foreign trip later on Wednesday.
"LANDMARK DEAL"
Indonesia - the world's fourth-largest country and a member of G20 - ran a goods trade surplus of US$17.9 billion with the United States in 2024, according to the US trade representative.
The trade deal with Indonesia broadly resembles the framework for Washington's deal with Vietnam, with a flat tariff on exports to the US roughly double the current 10 per cent and no levies on US exports to Indonesia.
It also included a penalty rate for so-called transshipments of goods from a 'higher tariff country', Trump said in a post on his Truth Social platform.
He added that Indonesia had committed to purchasing US$15 billion in US energy, US$4.5 billion of American farm products and 50 Boeing jets.
No time frame was specified for these purchases.
It remains unclear when the new tariff rate for Indonesia will come into effect.
'This landmark Deal opens up Indonesia's ENTIRE MARKET to the United States for the first time in History,' Trump wrote on Truth Social.
'I think it's a good deal for both parties, but we will have full access into Indonesia and we have a couple of those deals that are going to be announced.'
In particular, Trump indicated that copper would be something the US would be interested in importing from Indonesia.
'Now, Indonesia has some great product and they also have some very valuable earths and various other materials,' he told reporters on Tuesday.
'One of the things, as you know, they're known for is very high-quality copper, which we'll be using."
"MEETING POINT"
Nasbi, the Indonesian president's spokesperson, called the deal a "meeting point" between the two governments, noting that Indonesia's tariff rate was much lower than other countries in Southeast Asia.
Indonesia's former vice minister for foreign affairs, Dino Patti Djalal, told a Foreign Policy event Tuesday that government insiders had indicated they were happy with the new deal.
Indonesia's stock index rose as much as 0.7 per cent on Wednesday after the deal, which some analysts said would provide a positive catalyst for economic activities.
"Well, 19 per cent is better than 32 per cent," Matt Simpson, a senior market analyst at City Index in Brisbane, said.
"Indonesian non-oil exports such as footwear and textiles will take a hit, but energy and agriculture are set to gain. Officials are, of course, pleased because they're in Trump's good books," he added.
However, some economists in Indonesia have hit out at the deal with Washington.
"This is not an agreement. It's ... a one-sided agreement," Jakarta-based Centre for Strategic and International Studies (CSIS) executive director Yose Rizal Damuri told AFP on Wednesday.
But he predicted American consumers would likely bear the costs more than Indonesian businesses, with Trump's tariffs sweeping across many countries.
"The United States itself will be the one more affected. Prices will rise," he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
24 minutes ago
- Business Times
Indonesia's Prabowo rolls out first of 80,000 cooperatives to boost growth
[JAKARTA] President Prabowo Subianto on Monday (Jul 21) launched the first of thousands of planned new community cooperatives, betting on a top-down approach and billions of dollars in loans from Indonesia's state banks to spur development and food self-sufficiency in the South-east Asian nation. Prabowo, speaking at a launch event in the central Java town of Klaten, described the initiative as part of his administration's efforts to shorten distribution chains and improve access to essential goods across the sprawling archipelago nation. Especially for 'those with weaker economic conditions,' he added. 'They must have access at affordable prices.' Zulkifli Hasan, Coordinating Minister for Food Affairs, said that more than a hundred of the new cooperatives are now operational, with plans to replicate the results in more than 80,000 communities across the country in the next three months. The ambitious initiative represents a significant state-driven effort to stimulate economic growth by channelling as much as US$15 billion in state-bank loans directly into local communities. The plan, which seeks to establish cooperatives in each village and urban ward across a nation of more than 280 million people, aims to bypass traditional bureaucratic and supply chain hurdles, expanding the president's grassroots influence. The rollout extends a string of populist measures introduced by Prabowo in his first year in office, following a countrywide free meals programme, enhanced health checks, and an economic stimulus package. The push is part of his broader strategy to boost food security and reduce rural poverty, as well as to eliminate predatory lending, long-standing challenges in the region's largest economy. He also hopes they'll play a role in his signature goal of boosting economic growth rates to 8 per cent, a mark last seen three decades ago. 'We shouldn't rely on food imports,' Hasan said in describing the administration's hopes for the initiative. 'We must be sovereign.' A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Named 'Red-White cooperatives' after Indonesia's national flag colours, the community-run facilities are envisioned as centres for local economic activities ranging from grocery distribution, fertiliser supply, subsidised cooking gas distribution, financial services, logistics and health care. Officials expect the initiative to create 2 million jobs while improving supply chain efficiency by eliminating middlemen and reducing the influence of loan sharks. Village heads are expected to lead the cooperatives. The Red-White cooperatives can each propose borrowing of as much as 3 billion rupiah from state banks, potentially placing collective lending at more than 240 trillion rupiah (S$18.8 billion). Critics have cautioned that the model could strain rural budgets and expose some of the nation's largest banks to heightened credit risks. In November, Prabowo directed state banks to forgive as much as US$550 million in bad loans held by micro and small businesses, particularly in agriculture and fisheries sectors, stoking concerns of the banks' exposure. The cooperative concept has deep roots in Indonesia, with mixed historical results. Cooperatives existed during the Dutch colonial era, and upon independence the concept was enshrined in Indonesia's constitution as foundational for economic democracy – aimed at promoting social equity and preventing economic domination by foreign powers or domestic elites. Founding president Sukarno championed cooperatives as tools of food self-sufficiency, though many remained informal and loosely organised. Under Suharto, the country's long-ruling strongman, cooperatives expanded dramatically beginning in the late 1970s. His centrally managed Village Unit Cooperatives, backed by state mandates and subsidies, played a central role in distributing fertiliser and rice and providing credit to farmers, often enjoying local monopolies. While credited with helping Indonesia achieve rice self-sufficiency in the 1980s, their top-down structure, close ties to the ruling Golkar party and heavy dependence on state support made them susceptible to inefficiency and politicisation. Many faltered following the 1997–98 Asian financial crisis, when subsidies were slashed and political support evaporated. Thousands were dissolved in the years that followed, leaving behind a legacy of public distrust and institutional fragility that continues to cloud perceptions of state-led cooperatives today. Still, they remain common, with active cooperatives numbering more than 130,000 nationwide last year. Membership comprises more than 10 per cent of the population. 'A cooperative is the tool of the weak,' Prabowo said at the launch event. 'A single stick is fragile and breaks easily. But when dozens or even hundreds of sticks are bound together, they become a powerful tool.' BLOOMBERG
Straits Times
2 hours ago
- Straits Times
China stops US commerce employee from leaving, reports say
Find out what's new on ST website and app. The US Commerce Department employee, an American citizen, had travelled to meet relatives, the Washington Post said. China has stopped an American citizen who works for the US Commerce Department from leaving the nation for several months, according to media reports – an episode that coincides with Beijing and Washington trying to arrange a leaders' summit so they can address their differences on trade. The Chinese-American individual who works for the Patent and Trademark Office had travelled to meet relatives, the Washington Post reported, citing four people familiar with the matter, who asked not to be identified discussing the sensitive issue. The US sent a very high-level message to Beijing to let the man depart, the newspaper added, citing one person. It said it didn't know the name of the man facing a so-called exit ban, which was put in place over an apparent failure to disclose on a visa application that he worked for the US government. Officials from Beijing and Washington – including in the Commerce Department – are negotiating a trade deal after US President Donald Trump hit goods from China with heavy tariffs that he later paused. Mr Trump also wants a meeting with Chinese leader Xi Jinping to sort through their problems, which also touch on technology curbs, rare earths and the status of Taiwan. To get the sitdown and a trade pact, Mr Trump has recently softened his harsh campaign rhetoric that focused on the US's massive trade deficit with China and resulting job losses. Earlier this month, US Secretary of State Marco Rubio said after meeting his Chinese counterpart, Mr Wang Yi, that there was 'a strong desire on both sides' for a Xi-Trump meeting. The outlook for such a meeting could be complicated if the episode involving the employee of the US Commerce Department escalates. The man, a veteran of the US army, was detained when he arrived in the southwestern city of Chengdu in April, the South China Morning Post reported on July 20 , citing a person familiar with the situation. He was being prevented from leaving China because his case was 'related to actions Beijing deemed harmful to national security,' the newspaper reported, though the specifics couldn't be confirmed. Since the man arrived in Chengdu, he had also traveled to the Chinese capital with a US official, the newspaper reported. The Patent and Trademark Office the man works for handles US patents and registers trademarks. It says on its website that its 'mission is to drive US innovation and global competitiveness'. A spokesperson US Embassy in Beijing said that its 'highest priority is the safety and security of US citizens overseas'. It added that 'we track these cases closely, and have raised our concern with Chinese authorities about the impact these arbitrary exit bans have on our bilateral relations and urged them to immediately allow impacted US citizens to return home'. The Foreign Ministry in Beijing didn't respond to a request for comment. China's use of exit bans has been a point of contention between Beijing and Washington in recent years. The US State Department has repeatedly advised citizens to reconsider travel to China based on what it called the 'arbitrary enforcement of local laws, including in relation to exit bans'. Wells Fargo recently suspended travel to the world's second-biggest economy after one of its top trade financing bankers was blocked from leaving. Ms Chenyue Mao, an Atlanta-based managing director who was born in Shanghai, was banned from departing after entering China in recent weeks, according to a person with knowledge of the situation. The case underscores multinational companies' fears about the risks of operating in China, especially in regard to staff safety and restrictions on movement. Among notable cases in recent years, the Wall Street Journal in 2023 reported a senior executive at US risk advisory firm Kroll was prevented from leaving China. In 2019, Bloomberg reported that a UBS Group AG wealth manager was detained for about three months before returning home. An academic analysis published in 2022, based on data from six governments, found 128 cases of foreign citizens facing Chinese exit bans, with at least a third of the cases driven by business disputes. Chinese law prohibits people suspected of crimes from leaving the country. Chinese citizens judged to have endangered national security can also face exit bans under the country's recently updated espionage law. BLOOMBERG
CNA
3 hours ago
- CNA
Philippines' Marcos to meet Trump hoping to secure trade deal
MANILA: Philippine President Ferdinand Marcos Jr meets US President Donald Trump this week, hoping Manila's status as a key Asian ally will secure a more favourable trade deal before an Aug 1 deadline. Marcos will be the first Southeast Asian leader to meet Trump in his second term. Trump has already struck trade deals with two of Manila's regional partners, Vietnam and Indonesia, driving tough bargains in trade talks even with close allies that Washington needs to keep onside in its strategic rivalry with China. "I expect our discussions to focus on security and defence, of course, but also on trade," Marcos said in a speech before leaving Manila. "We will see how much progress we can make when it comes to the negotiations with the United States concerning the changes that we would like to institute to alleviate the effects of a very severe tariff schedule on the Philippines." The United States had a deficit of nearly US$5 billion with the Philippines last year on bilateral goods trade of US$23.5 billion. Trump this month raised the threatened "reciprocal" tariffs on imports from the Philippines to 20 per cent from 17 per cent threatened in April. Although US allies in Asia such as Japan and South Korea have yet to strike trade deals with Trump, Gregory Poling, a Southeast Asia expert at Washington's Center for Strategic and International Studies, said Marcos might be able to do better than Vietnam, with its agreement of a 20 per cent baseline tariff on its goods, and Indonesia at 19 per cent. "I wouldn't be surprised to see an announcement of a deal with the Philippines at a lower rate than those two," Poling said. Marcos, who arrived in Washington on Sunday, is due to hold talks with Secretary of State Marco Rubio and Defense Secretary Pete Hegseth on Monday before meeting Trump at the White House on Tuesday. He will also meet US business leaders investing in the Philippines during his trip. "MUTUALLY BENEFICIAL" DEAL Philippine officials say Marcos' focus will be on economic cooperation and Manila's concerns about the tariffs. They say he will stress that Manila must become economically stronger if it is to serve as a truly robust partner for the US in the Indo-Pacific. Philippine Assistant Foreign Secretary Raquel Solano said last week that trade officials have been working with US counterparts seeking to seal a "mutually acceptable and mutually beneficial" deal for both countries. Trump and Marcos will also discuss defence and security, and Solano said the Philippine president would be looking to further strengthen the longstanding defence alliance. With the Philippines facing intense pressure from China in the contested South China Sea, Marcos has pivoted closer to the US, expanding its access to Philippine military bases amid China's threats towards Taiwan, the democratically governed island claimed by Beijing. The United States and the Philippines have a seven-decade-old mutual defence treaty and hold dozens of annual exercises, which have included training with US Typhon missile system, and more recently with the NMESIS anti-ship missile system, angering China. Manila and the US have closely aligned their views on China, Poling said, and it is notable that Rubio and Hegseth made sure their Philippine counterparts were the first Southeast Asian officials they met.
