Indonesia, US Agree to Finalize Tariff Deal Within 60 Days
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JAKARTA, Investortrust.id –— Indonesia and the United States have agreed to finalize a bilateral trade deal within 60 days, as both nations seek to ease escalating tariff tensions and rebalance trade flows. The agreement emerged during high-level negotiations in Washington DC, with Indonesia proposing increased energy and commodity imports from the US in exchange for lower reciprocal tariffs that have put pressure on Indonesian exports, particularly textiles and garments.
The talks were led by Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto, who confirmed the accelerated timeline during a press conference on Friday, April 18, 2025. He noted that both countries had already agreed on the preliminary structure of the agreement, which will span trade partnerships, investment facilitation, critical mineral cooperation, and supply chain resilience.
“Indonesia and the United States have agreed to conclude this negotiation within 60 days,” said Airlangga. “We will follow up with several rounds of meetings—possibly one, two, or even three—to finalize the agreement format.”
The urgency of the talks stems from the reimplementation of a reciprocal tariff policy introduced by US President Donald Trump, which imposes a 32% tariff on goods from Indonesia. Although the policy is currently delayed, it has already impacted key sectors such as textiles, where tariff rates could rise from the existing 10%–37% range to as high as 47%.
To mitigate the impact, Indonesia has offered to increase imports of US energy commodities—including liquefied petroleum gas (LPG), crude oil, and gasoline—as well as agricultural goods like wheat, soybeans, and soybean meal. The proposal is part of a broader strategy to narrow the trade surplus, which stood at $14.5 billion in Indonesia’s favor according to Statistics Indonesia (BPS), though US data reports a larger gap.
“We aim for a fair and balanced trade environment,” said Airlangga. “The offer to purchase more US energy is part of our strategic adjustment.”
Minister of Energy and Mineral Resources Bahlil Lahadalia emphasized the same message after a meeting with President Prabowo Subianto on Thursday, April 17, 2025. He confirmed that Indonesia’s plan to import more US energy products was designed to support trade equilibrium and strengthen its negotiating stance.
“Balancing the trade account with the US is essential. That’s why we’ll be buying more LPG, crude oil, and gasoline from the US,” said Bahlil.
From the US side, discussions also involved representatives from the United States Trade Representative (USTR) and the Department of Commerce. The Indonesian delegation pitched a stronger business-to-business investment framework and proposed collaboration in human capital development—especially in science, technology, digital economy, engineering, and education.
In addition, Indonesia raised concerns about the financial services sector, highlighting the need for mutually beneficial arrangements that also support American interests. The discussions, according to Airlangga, reflect Indonesia’s willingness to engage in pragmatic diplomacy while protecting its domestic industries.
Textile Industry Faces 47% Tariff Burden
One of the most severely affected sectors is textiles, where US tariffs now combine Most-Favored Nation (MFN) rates of 10%–37% with an added 10% base tariff during the reciprocal tariff suspension. This surcharge raises export costs for Indonesian manufacturers, prompting buyers to demand that Indonesian firms absorb part of the additional duty.
“Buyers are asking Indonesian exporters to share the burden of these taxes. That makes our exports less competitive,” Airlangga said.
In response, the Indonesian government is expanding export market diversification, especially for labor-intensive industries like textiles and footwear. According to Deputy Chair of the National Economic Council Mari Elka Pangestu, efforts to identify alternative export destinations and production hubs began well before the tariff announcement on April 2.
“Even before the formal announcement, several industries had already started exploring new production sites and export markets,” said Mari. “We are also facilitating investors interested in relocating to these sectors.”
She added that the government’s revitalization program for labor-intensive industries includes supply chain diversification strategies to reduce overdependence on China.