Indonesia agrees to drop non-tariff barriers in trade victory for Donald Trump

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Indonesia will commit to changing an array of rules and regulations under a new trade deal with Donald Trump’s administration, according to details of the agreement released on Tuesday. 

The president last week announced that he had struck a deal with the south-east Asian nation that would have the US apply tariffs of 19 per cent to its imports, while Indonesia would apply no tariffs to most American goods.

The two sides released a written “framework” on Tuesday, which said they would “in the coming weeks . . . negotiate and finalise the Agreement on Reciprocal Trade”.

Trump has threatened to increase his “reciprocal” tariffs on trading partners again on August 1 unless deals are reached. Of the dozens of countries facing increased levies, Washington has struck limited deals with the UK, Vietnam and Indonesia, and agreed a de-escalation of tariffs with China.

According to the joint statement, Indonesia will halt some inspections of US farm goods entering the country.

The two sides will also “work together” on Indonesia recognising American rules on car safety and drugs and pharmaceuticals. Jakarta would ditch export controls on industrial commodities and critical minerals being sent to the US, the statement said.

The deal marks the first time Trump has successfully pushed a trading partner into committing to drop a series of so-called non-tariff barriers, which was one of the main aims of his reciprocal tariffs.

“This Deal is a HUGE WIN for our Automakers, Tech Companies, Workers, Farmers, Ranchers, and Manufacturers. Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN!” Trump wrote on Truth Social.

In a separate post, Trump announced that the Philippines, whose president Ferdinand Marcos visited the White House on Tuesday, would pay a 19 per cent tariff, down from a proposed 20 per cent.

The joint framework between Indonesia and the US said the nations would “take note” of “forthcoming commercial deals” between the two countries, including Indonesia’s purchase of $3.2bn of US aircraft, along with $4.5bn of agricultural products, including soyabeans, wheat and cotton, and $15bn of energy products.

Trump’s trade representative Jamieson Greer said the Indonesian framework “shows that America can defend its domestic production while obtaining expansive market access with our trading partners.”

The framework is the first since Trump sent letters to more than 20 trading partners a fortnight ago outlining tariff levels on their exports if they did not reach an agreement by August 1.

In the letter to Indonesia, Trump threatened to impose a 32 per cent levy, which was identical to the reciprocal tariff rate unveiled for the south-east nation on April 2.

Washington has also threatened to apply a higher tariff to goods that are “transhipped” to the US through Indonesia but actually originate from a third country. 

A US official insisted that while Washington wanted to put tariffs on imports that were manufactured in “non-market economies”, the move was not targeted at China. 

“The transshipment rules are not specifically directed at China by any means,” the official said.

“The point of the transshipment rules is to ensure that we have bilateral trade agreements . . . and there’s not a third party that’s getting an undue benefit without making the types of commitments that we have.”