United States and Indonesia Agree on Framework for Landmark Trade Deal
Main Takeaways
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JAKARTA, Investortrust.id – The United States and Indonesia have agreed to begin formal negotiations on a Reciprocal Trade Agreement that will significantly reduce trade barriers and expand market access for businesses in both countries, according to a joint statement issued by the White House on Tuesday, July 22, 2025.
The agreement sets out a framework for eliminating nearly all Indonesian tariffs on U.S. industrial and agricultural exports, while the United States will lower its reciprocal tariffs on Indonesian goods to 19 percent. “Indonesia will eliminate approximately 99 percent of tariff barriers for a full range of U.S. industrial and U.S. food and agricultural products,” the statement reads. In return, “the United States will reduce to 19 percent the reciprocal tariffs, as set forth in Executive Order 14257 of April 2, 2025, on originating goods of Indonesia.”
The framework builds upon the longstanding U.S.-Indonesia Trade and Investment Framework Agreement, signed in 1996, and includes commitments to negotiate simplified rules of origin “that ensure that the benefits of the agreement accrue primarily to the United States and Indonesia.”
The two countries have also pledged to tackle non-tariff barriers that have long hampered trade. “The United States and Indonesia will work together to address Indonesia’s non-tariff barriers that affect bilateral trade and investment in priority areas,” the statement continues.
These areas include exempting U.S. firms from local content requirements, recognizing U.S. federal vehicle safety standards, and accepting U.S. Food and Drug Administration (FDA) certifications for pharmaceuticals and medical devices. Indonesia also agreed to “address U.S. concerns with conformity assessment procedures” and remove pre-shipment inspections and licensing hurdles for imports of U.S. remanufactured goods.
On agricultural trade, the statement affirms that both countries “are committed to address and prevent barriers to U.S. food and agricultural products in the Indonesian market,” including the removal of import licensing regimes and the recognition of U.S. oversight for plant and animal products. Indonesia will also “provide permanent Fresh Food of Plant Origin (FFPO) designation for all applicable U.S. plant products.”
Digital Win
In a major win for U.S. digital exporters, Indonesia has agreed to provide legal certainty for cross-border data transfers and to suspend tariffs on intangible digital goods. “Indonesia will provide certainty regarding the ability to transfer personal data out of its territory to the United States,” the statement notes. It further pledges that Indonesia will support “a permanent moratorium on customs duties on electronic transmissions at the WTO immediately and without conditions.”
Indonesia has also committed to aligning with global labor and environmental norms. The country will “adopt and implement a prohibition on the importation of goods produced by forced or compulsory labor” and amend its labor laws to ensure workers’ rights to organize and bargain collectively.
On the environmental front, Indonesia will take action “to improve forest sector governance and combat trade in illegally harvested forest products,” while also committing to the WTO Agreement on Fisheries Subsidies and efforts to reduce illegal fishing and wildlife trade.
The framework includes provisions to strengthen economic and national security cooperation. Both countries will coordinate on export controls, investment security, and efforts to counter duty evasion. “The United States and Indonesia are committed to strengthening economic and national security cooperation to enhance supply chain resilience and innovation,” the statement says.
Commercial Deals
In addition to policy reforms, the agreement highlights several forthcoming commercial deals between U.S. and Indonesian companies. These include a $3.2 billion procurement of U.S. aircraft, $4.5 billion in agricultural purchases such as soybeans, wheat, and cotton, and $15 billion in energy-related transactions covering liquefied petroleum gas, crude oil, and gasoline.
“The United States and Indonesia will negotiate and finalize the Agreement on Reciprocal Trade, prepare the Agreement for signature, and undertake domestic formalities in advance of the Agreement entering into force,” the statement concludes.