Framework for US-Indonesia trade deal sets 19% tariff on US imports

The US and Indonesia have agreed to a framework for a trade deal that sets a 19% tariff rate on all US imports, the White House announced on July 22.

The framework also eliminates "approximately 99%" of trade barriers for US industrial and food and agricultural products exported to Indonesia, according to the administration.

Trump announced a tentative deal with Indonesia on July 15, when he first set the 19% tariff. This rate is 13% lower than the 32% rate Trump threatened in a July 7 trade letter he delivered to the country.

Dozens of US trading partners are looking to reach deals with the US ahead of an Aug. 1 deadline when country-specific tariff rates will take effect.

As part of the framework, Indonesia will commit to joining the Global Forum on Steel Excess Capacity and "take effective actions to address global excess capacity in the steel sector and its impacts," the administration said. The global forum is an international platform that seeks to reduce excess steel capacity.

Indonesia ranks as the world's 10th largest steel exporter, with its top three export markets for steel being China, Taiwan, and India. The country's steel exports increased 385% between 2015 and 2023, according to the International Trade Administration.

The framework also said Indonesia will "remove restrictions on exports to the United States of industrial commodities, including critical minerals."

Indonesia will commit to adopting and maintaining high levels of environmental protection and enforcement of its environmental laws as part of the terms of the framework.

Three commercial deals between US and Indonesian companies are included in the framework, with one targeting energy products like liquefied petroleum gas, crude oil and gasoline. It has an estimated value of $15 billion.

The framework also includes provisions that prevent barriers to US food and agricultural products in the Indonesian market and barriers impacting digital trade. It also requires Indonesia to prohibit importing goods produced by forced labor.

Indonesia is a smaller US trading partner, but exports electrical machinery and clothing to the US.

The two countries will negotiate and finalize the agreement in the coming weeks.