U.S.-Indonesia Trade Deal at Risk as Jakarta Backtracks

The U.S.-Indonesia trade agreement is in jeopardy as Indonesia retracts several commitments. Indonesia had initially agreed to eliminate tariffs on U.S. goods, while the U.S. would reduce tariffs on Indonesian imports. New developments may lead to less favorable terms for the U.S. than with Malaysia and Cambodia.

A U.S. trade agreement with Indonesia, finalized in July, faces potential collapse as Indonesian officials reconsider key commitments, said a U.S. official on Tuesday. Terms of the agreement required Indonesia to eliminate tariffs on over 99% of U.S. goods.

In return, the U.S. planned to reduce threatened tariffs on Indonesian imports from 32% to 19%. President Trump had touted the deal as a significant victory for American industries, but now, Indonesia seeks to renegotiate binding commitments, raising concerns among U.S. officials.

This renegotiation might lead to less favorable outcomes for the U.S. compared to recent deals with Malaysia and Cambodia. Despite the setback, no official statement has been released by the U.S. Trade Representative. Recent events suggest Indonesia is retreating from reducing industrial and agricultural export barriers and addressing digital trade issues.