Trump sets 19% tariff on Indonesia goods in latest trade deal

WASHINGTON: President Donald Trump on Tuesday (Jul 15) said the United States would impose a 19 per cent tariff on goods from Indonesia under a new agreement with the Southeast Asian country and said more deals were in the works as he continued to press for what he views as better terms with trading partners and a path to reducing a massive US trade deficit.

The pact with the relatively minor US trading partner is among the handful struck so far by the Trump administration ahead of an Aug 1 deadline for tariffs on most US imports to rise again.

The agreement came as the US's top trading partner, the European Union, readied retaliatory measures should talks between Washington and its top trading partner fail.

Trump outlined an Indonesia deal that had rough contours resembling a pact struck recently with Vietnam, with a flat tariff on exports to the US roughly double the current 10 per cent and no levies placed on US exports going there.

It also included a penalty rate for so-called transshipments of goods from China via Indonesia, and a commitment to buy some US goods.

"They are going to pay 19 per cent 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.

In addition, Trump said later on his Truth Social platform that Indonesia had agreed to buy US$15 billion of US energy products, US$4.5 billion of American farm products and 50 Boeing jets, though no time frame for the purchases was specified.

TRUMP: INDIA TALKS MOVING SAME WAY

Indonesia's total trade with the US - totalling just under US$40 billion in 2024 - does not rank in the top 15, but it has been growing. US exports to Indonesia rose 3.7 per cent last year, while imports from there were up 4.8 per cent, leaving the US with a goods trade deficit of nearly US$18 billion.

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.

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 country with a 32 per cent tariff rate effective Aug 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 per cent up to 50 per cent, as well as a 50 per cent tariff on copper.

The Aug 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 that 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 now we're getting access because of what we're doing with the tariffs," he said.

Trump also said on Tuesday that the trade agreement with Vietnam was nearly complete, telling reporters at Joint Base Andrews that he could release details but did not think it was necessary. 

The US president announced earlier this month that he had struck a preliminary trade deal with the country, which would cut planned US tariffs on imports from Vietnam to 20 per cent from the 46 per cent level he had threatened in April.

At the time, Trump also said goods that Washington deemed to be illegally transhipped through Vietnam to other countries would be subject to a 40 per cent levy.

The agreement has not been finalised, and details have not been released, leaving questions over how Washington will define an illegal transhipment and how much value Vietnam must add to imported products to avoid the 40 per cent tariff.

It also remains unclear which products would fall under Trump's 20 per cent tariff.

The US president said on Tuesday that letters would also be going out soon for many smaller countries, suggesting they would face a tariff of "a little over 10 per cent".

Based on Trump's tariff announcements through Jul 13, Yale Budget Lab estimates the US effective average tariff rates will rise to 20.6 per cent from between 2 per cent and 3 per cent before Trump's return to the White House in January.

Consumption shifts would bring the rate down to 19.7 per cent, but it's still the highest since 1933.

EU READIES RETALIATION

The breakthrough with Indonesia came as the European Commission, the EU's governing body, gets set to target €72 billion (US$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 per cent tariff on imports from the EU from Aug 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 per cent 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.

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.