 "Trump announces 19% tariff on Indonesian goods amid trade push, EU prepares countermeasures")
US President Donald Trump said on Tuesday that under a new agreement with Indonesia, the US would impose a 19% tariff on goods from the Southeast Asian country, and that more deals were in the works as he continued to press for better terms with trading partners and a path to reducing the US’s massive trade deficit.
Ahead of an August 1 deadline for the reimposition of tariffs on the majority of US imports, the Trump administration has reached a number of agreements, including this one with the relatively minor US trading partner. The European Union, the US’s largest trading partner, has prepared retaliatory measures in the event that negotiations between Washington and its top trading partner fail.
Few details have been revealed about the Indonesia pact, but the broad strokes suggested by Trump and Howard Lutnick, his Commerce Department secretary and one of his senior trade negotiators, matched the framework agreement reached with Vietnam in recent weeks.
“They are going to pay 19% and we are going to pay nothing … we will have full access into Indonesia, and we have a couple of those deals that are going to be announced,” Trump said outside the Oval Office.
Earlier, Lutnick told CNBC that the Indonesia agreement will follow the practice of eliminating tariffs on US exports while applying tariffs on imports, similar to the Vietnam arrangement.
“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 said.
Impact Shorts
More ShortsIndonesia’s overall commerce with the United States, estimated to reach slightly under $40 billion in 2024, is not among the top 15, although it is expanding. Last year, US exports to Indonesia increased by 3.7%, while imports increased by 4.8%, resulting in a roughly $18 billion goods trade imbalance.
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. World Trade Organization data shows Indonesia’s simple average tariff rate at 37.1%, but its trade weighted average applied tariff rate in 2024 was far lower at 5.7%.
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 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.”
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.
Trump said talks with India were moving in a similar direction.
“India basically is working along that same line. We’re going to have access to India. And you have to understand, we had no access into any of these countries. Our people couldn’t go in. And now we’re getting access because of what we’re doing with the tariffs,” he said.
EU readies retaliation
The breakthrough with Indonesia came as the European Commission, which oversees trade for the EU, 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 US 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.
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