Late last month, media reports suggested the US is not going to impose its reciprocal tariff of 19% on Indonesian goods starting this month, as both countries had yet to finalize a bilateral trade agreement.
The reciprocal tariff policy, recently introduced by US President Donald Trump, is going to only apply to countries that have yet to complete detailed negotiations. The implementation depends on if a bilateral agreement had been finalized, as per reports at the time.
Until a deal is signed, Indonesian exports to the US are going to continue to be subject to the current 10% tariff rate, it had been reported. But things are much different at the moment. Let us take a look.
US and Indonesia reach landmark trade agreement
The US and Indonesia recently reached a landmark trade agreement that is going to offer customers in the US market access in Indonesia once considered impossible and unlock major breakthroughs for the US’s manufacturing, agriculture and digital sectors.
Under this agreement, Indonesia is going to pay the US a reciprocal tariff rate of 19%. Interestingly, the US and Indonesia are also planning to sign an $8 billion contract related to building 17 modular oil refineries.
This deal features Indonesia’s Danantara and US-based KBR. Reuters reported that Danantara manages assets amounting to more than $900 billion and backs Indonesia’s long-term goal of increasing the country’s economic progress rate to 8% from 5%.
