Indonesia Lowers Tariff to 19%! Officials Claim a “Huge Victory”

Indonesia and the United States reached a 19% tariff agreement.

Indonesia officially declares a "major victory"

Recently, U.S. President Trump announced a uniform 19% tariff on goods from Indonesia, while Indonesia will exempt U.S. goods from tariffs and non-tariff barriers. He also revealed that several more deals are forthcoming, including a new tariff plan involving pharmaceuticals.

Indonesia considers this a "huge victory."

The spokesperson for the Indonesian President told reporters on Wednesday: "This is an extraordinary battle led by our negotiating team under the Coordinating Minister for Economic Affairs."

Heriyanto Irawan, an advisor to Indonesia's National Economic Committee (DEN), stated in an interview with Bloomberg Television that this agreement is "a major breakthrough" for Indonesia's labor-intensive industries such as apparel and footwear, bringing more opportunities to enter the U.S. market.

Susiwijono Moegiarso, Secretary of the Coordinating Ministry for Economic Affairs of Indonesia, stated on the same day that Indonesia is preparing to issue a joint statement with the United States, which will include details such as non-tariff measures and specific business agreements.

The price Indonesia paid for this

"They paid 19%, we paid nothing," Trump told the media at the White House. "We will fully enter the Indonesian market, and several deals will be announced soon."

According to the agreement, Indonesia commits to purchase from the United States:

50 Boeing airplanes

15 billion USD energy products

$4.5 billion worth of agricultural products

At the same time, Indonesia will exempt American goods from tariffs and non-tariff barriers.

Trump stated that this agreement is similar to the preliminary agreement previously reached with Vietnam:

The United States imposes a uniform tariff on imported goods at about twice the original rate (approximately 19-20%), while exempting American products from export duties.

The agreement also includes a "reverse transshipment" clause: if Chinese goods are found to be transshipped through Indonesia to the United States, punitive tariffs will be imposed.

On the day the agreement was announced, the Indonesian stock market rose by 0.7%. Some analysts believe this will boost confidence in the relevant industries and stimulate economic activity in the short term.

The three major risks have not yet been eliminated.

Indonesia has temporarily avoided the 32% high tax rate, but there are still three key risks in the future.

Tariff details yet to be determined.

The U.S. side has not yet officially announced the implementation details. If Congress or the industry raises objections, the tariffs may be postponed or modified.

Escalation of the US-Europe trade war

The EU has drafted a 72 billion euro retaliation list. If implemented, the US may counteract, once again affecting the Indonesia agreement.

Regional "Follow-up" Effect

Countries such as the Philippines and Thailand may demand similar treatment, leading to a new round of restructuring and competition in the regional supply chain landscape.

Therefore, the Indonesian footwear industry and global brands still need to remain vigilant and prepare in advance for supply chain adjustments and cost management strategies.