Indonesia and US Negotiate Trade Tariffs

Indonesia is in talks with the United States regarding import tariffs, potentially offering near-zero duties on key US commodities in exchange for favorable terms. The deal may also include significant purchases of wheat and Boeing aircraft.

Proposed Trade Agreement Details

Indonesia is considering reducing tariffs on major US exports to between 0% and 5%, including agricultural products. In return, the Indonesian government seeks reduced import tariffs from the US, particularly on electronics, textiles, and footwear.

A purchase of Boeing aircraft by Garuda Indonesia is also under discussion as part of the cooperation agreement expected to be signed next week. Further sweetening the pot, Indonesia will import wheat worth US $500 million, approximately Rp 8.09 trillion (at an exchange rate of Rp 16,087).

The proposed deal comes after Indonesia recorded a US $17.9 billion trade surplus with the US in 2024.

Official Statements

“(Tariffs) The main US exports are close to zero, but also depending on how much the tariff we get from the US,” said Coordinating Minister for the Economy Airlangga Hartarto, according to Reuters.

According to a report by the U.S. Department of Agriculture, U.S. agricultural exports to Indonesia totaled $3.6 billion in 2023, making it the 13th largest market for U.S. agricultural products (USDA).

Garuda and Boeing

Wamildan Tsani, President Director of Garuda, is reportedly in discussions with Boeing to potentially acquire 75 aircraft. Garuda has not yet officially commented.

Wheat Import Increase

Indonesia is also proposing an increase in wheat imports as part of the agreement being discussed next week.

“Its members will buy a total of two million tons through a tender at a competitive price. The point is that all members will buy US wheat,” explained Franciscus Welirang, Chairman of the Indonesian Flour Flour Factory Association.

Existing Trade Dynamics

Currently, Indonesia imports soybeans, petroleum gas, and airplanes from the US. Susiwijono Moegiarso, Secretary of the Coordinating Ministry for Economic Affairs, stated that the government has requested the US to lower tariffs on key Indonesian exports like electronics, textiles, and footwear.

Investment Opportunities

Indonesia is also offering opportunities for US investment in significant mineral projects, which include resources of copper, nickel, and bauxite.