US President Donald Trump on Tuesday announced a trade deal with Indonesia, the latest pact in a bid to cement better terms with trading partners and reduce a massive trade deficit, even as the European Union readied retaliatory measures should talks between Washington and its top trading partner fail.
“Great deal, for everybody, just made with Indonesia. I dealt directly with their highly respected President. DETAILS TO FOLLOW!!!” Trump said in a post on Truth Social.
Indonesia’s total trade with the US—totalling just under $40 billion in 2024—does not rank in the top 15, but it has been growing. U.S. exports to Indonesia rose 3.7% last year, while imports from there were up 4.8%, leaving the US with a goods trade deficit of nearly $18 billion.
The top US import categories from Indonesia, according to US Census Bureau data retrieved on the International Trade Centre’s TradeMap tool, last year were palm oil, electronics equipment including data routers and switches, footwear, car tires, natural rubber and frozen shrimp.
Susiwijono Moegiarso, a senior official with Indonesia’s Coordinating Ministry for Economic Affairs, told Reuters in a text message: “We are preparing a joint statement between the US and Indonesia that will explain the size of reciprocal tariff for Indonesia including the tariff deal, non-tariff and commercial arrangements. We will inform (the public) soon.”
US Commerce Secretary Howard Lutnick told CNBC that the Indonesia deal would continue a trend of eliminating tariffs on US exports, while imposing tariffs on imports, similar to the trade framework recently announced with Vietnam.
“He announced Indonesia just this morning. No tariffs there. They pay tariffs here, switching the asymmetry our way. Let’s bring industry back, and that’s going to unleash our farmers, our ranchers, our fishermen and our industries .”
Lutnick did not specify the level of tariffs to be levied on Indonesian products.
Trump had threatened the southeast Asian country with a 32% tariff rate effective August 1 in a letter sent to its president last week. He sent similar letters to roughly two dozen trading partners this month, including Canada, Japan and Brazil, setting blanket tariff rates ranging from 20% up to 50%, as well as a 50% tariff on copper.
The August 1 deadline gives the targeted countries time to negotiate agreements that could lower the threatened tariffs. Some investors and economists have also noted Trump’s pattern of backing off his tariff threats.
Since launching his tariff policy, Trump has clinched only a few deals despite his team touting an effort to bring home “90 deals in 90 days.” So far, framework agreements have been reached with the United Kingdom and Vietnam, and an interim deal has been struck with China to forestall the steepest of Trump’s tariffs while negotiations continue between Washington and Beijing.
EU readies retaliation
The breakthrough with Indonesia came as the European Commission, the EU’s governing body, gets set to target 72 billion euros ($84.1 billion) worth of US goods—from Boeing aircraft and bourbon whiskey to cars—for possible tariffs if trade talks with Washington fail.
Trump is threatening a 30% tariff on imports from the EU from August 1, a level European officials say is unacceptable and would end normal trade between two of the world’s largest markets.
The list, sent to EU member states and seen by Reuters on Tuesday, pre-dates Trump’s move over the weekend to ramp up pressure on the 27-nation bloc and responds instead to U.S. duties on cars and car parts and a 10% baseline tariff.
The package also covers chemicals, medical devices, electrical and precision equipment as well as agriculture and food products – a range of fruits and vegetables, along with wine, beer and spirits – valued at 6.35 billion euros.
Following a meeting of EU ministers in Brussels on Monday, officials said they were still seeking a deal to avoid Trump’s heavy tariff blow.
But EU trade chief Maros Sefcovic said those at the meeting expressed unprecedented resolve to protect EU businesses using European countermeasures if negotiations with Washington fail to produce a deal.
Reuters
