InfoSAWIT, JAKARTA — Indonesia’s strategic push to strengthen international trade is gaining momentum. On July 22, Indonesia and the United States officially announced a Joint Statement following lengthy bilateral negotiations on trade tariff policies.
Under the agreement, Indonesia secured a tariff reduction from 32% to 19%. Although this is among the more conservative tariff cuts compared to other countries with trade deficits with the US, the deal opens new opportunities for Indonesian export commodities to compete in the American market.
The US is currently one of Indonesia’s largest trading partners, accounting for 11.22% of total exports in 2024. It is also a key source of foreign direct investment, reaching US$3.7 billion that year.
New Prospects for Strategic Commodities
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated in a press conference on Thursday (24/7) that the Joint Statement serves as a strong political and diplomatic foundation for a future trade agreement.
“Technical discussions will continue to determine which commodities will receive reduced or near-zero tariffs. These include palm oil, coffee, cocoa, agro-mineral products, aircraft components, and industrial goods from specific zones,” Airlangga explained.
The move brings new hope for Indonesia’s strategic sectors—especially palm oil, which has long faced tariff barriers and negative campaigns in global markets. With lower tariffs, opportunities for crude palm oil (CPO) and its derivatives—including oleochemicals and biodiesel—to re-enter the US market are wide open.
Coffee and cocoa—flagship commodities from Sumatra, Sulawesi, and Papua—could also see a boost in exports and downstream development.
The government’s goal isn’t just to increase export volume. Airlangga emphasized that this agreement is also designed to enhance national competitiveness through innovation, capacity building, and R&D. It’s expected to accelerate digital transformation and strengthen interregional logistics systems.
“This partnership isn’t just about safeguarding the trade balance; it’s also about securing sustainable economic growth and creating jobs, especially in labor-intensive industries,” said Airlangga.
He warned that with a 32% tariff, trade activity essentially comes to a halt. “It’s basically a trade embargo. If left unchecked, the impact could be severe—potentially affecting over a million workers in labor-intensive sectors.”
Indonesia is currently continuing technical negotiations to finalize the list of commodities eligible for special tariff treatment, aiming to make export-driven industries more globally competitive and integrated. (T2)
