U.S.-Indonesia Trade Deal Hands Jakarta a Tariff Edge in Key Exports

WASHINGTON, Investortrust.id — A new trade agreement signed by President Donald Trump and President Prabowo Subianto on Wednesday, Feb 19, 2026 in Washington is being framed in Jakarta as a competitive win that could give Indonesian exporters a tariff edge in the U.S. market, particularly in textiles and apparel, while locking in broader market access and investment commitments.

Under the Agreement on Reciprocal Trade, the United States will maintain a 19% reciprocal tariff rate on Indonesian imports, but certain identified products will receive a 0% rate, including a to-be-specified volume of textile and apparel goods tied to American cotton and man-made fiber inputs.

For Indonesia, Southeast Asia’s largest economy, the carve-out for apparel is seen as strategically significant at a time when global buyers are diversifying supply chains and scrutinizing tariff differentials across Asia.

Business Sees Competitive Tariff Window

Anindya Novyan Bakrie, chairman of the Indonesian Chamber of Commerce and Industry or Kadin Indonesia, described the 19% tariff as competitive compared with alternative trade routes and said some export products could effectively enter the U.S. market duty-free.

“Our hope at Kadin, and from what we hear, the 19% tariff is already very competitive. Moreover, some of our export products that use components from the United States could even be reduced to zero tariffs. This is very interesting, but we need to study the details,” Anindya said in Washington on Wednesday.

He added that manufacturers were exploring ways to import U.S. inputs, process them in Indonesia, and re-export finished goods back to the United States with added value.

“I spoke with one of the leaders of the Indonesian Furniture and Handicraft Industry Association here. They want to talk with their counterparts to see what can be imported from the United States, processed, and then shipped back to the United States with added value,” he said.

The structure aligns with President Prabowo’s downstream industrialization agenda, which seeks to shift Indonesia from a raw commodity exporter to a value-added manufacturing hub.

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Beyond textiles, the agreement commits Indonesia to remove tariff barriers on more than 99% of U.S. exports and address non-tariff measures, while Washington signaled flexibility under national security trade provisions and pledged to consider the broader partnership in future trade actions.

At the same event, Prabowo underscored the importance of predictability for investors.

“This provides a clear signal that Indonesia and the United States choose to continue deeper economic cooperation, stronger market access, and greater certainty for the business community,” he said.

“No one wants to invest in a situation of uncertainty, instability, or even chaos. We are fortunate that Indonesia has enjoyed a relatively long period of stability and peace,” Prabowo added.

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The two sides also witnessed the signing of 11 memoranda of understanding valued at $38.4 billion, covering mining and downstream processing, energy, agribusiness, textiles and garments, furniture manufacturing and technology development.

For Jakarta, the deal comes as Washington seeks to narrow a $23.7 billion goods trade deficit with Indonesia recorded in 2025, while Indonesia aims to secure durable access to one of its largest export markets.

The coming weeks will test how quickly both governments can translate the framework into operational rules, particularly on textile quotas and rules of origin, which could determine whether Indonesian factories gain a decisive tariff advantage over regional competitors.