Indonesia and the United States officially issued a Joint Statement marking the culmination of protracted bilateral negotiations on trade tariffs on 22th July 2025. The agreement reduced reciprocal import tariffs from 32% to 19%, delivering a more favourable outcome for Indonesian exports to the US market. This reduction, while modest compared to other trade partners, nonetheless represents a significant stride for Indonesia’s international trade strategy, particularly given the US’s position as one of Indonesia’s major export destinations (11.22% of total exports in 2024) and a key source of foreign direct investment (USD 3.7 billion in 2024). The Joint Statement is viewed as a diplomatic and political anchor for advancing to a more comprehensive trade agreement. As part of ongoing technical discussions, Indonesia will negotiate for further tariff reductions, potentially approaching 0%, for selected premium export commodities, specifically crude palm oil (CPO), coffee, cocoa, agro‑minerals, aerospace components, and manufacturing outputs from designated free trade zones.
Notably, the agreement offers hope for Indonesia’s palm oil sector, long burdened by trade barriers and international scrutiny. Reduced tariffs are expected to open access not only for raw CPO but also for downstream products such as oleochemicals and biodiesel. Similarly, export performance of coffee and cocoa, key products from regions like Sumatra, Sulawesi, and Papua, stands to benefit significantly, with potential spillover effects into domestic value‑added processing and innovation. Beyond tariff matters, Indonesia aims to leverage the agreement to strengthen domestic competitiveness through investment in research & development, capacity building, technological innovation, and digital transformation. The initiative also aligns with efforts to improve logistics infrastructure, promote industrial upgrading, and support sustainable economic growth. In sum, while the current tariff cut to 19% represents only the first step, the Joint Statement reflects a clear pathway toward deeper economic integration and strategic advantages for Indonesia’s key export sectors.
