US and Indonesia Finalise Deal to Cut Tariffs to 19%

Published: 20 February 2026. The English Chronicle Desk. The English Chronicle Online

The United States and Indonesia have finalised a major reciprocal trade agreement that will see Washington lower tariffs on Indonesian goods to 19 percent, deepening economic ties between the two nations and reshaping their long-standing trade relationship. The agreement was formally signed in Washington, D.C., by Indonesian President Prabowo Subianto and US Trade Representative Jamieson Greer, after months of negotiations aimed at boosting trade and investment as global economic uncertainty grows.

Under the new pact, Indonesian exports to the United States — formerly subject to a higher tariff rate of up to around 32 percent under previous US policy — will now face the agreed 19 percent reciprocal tariff. In return, Indonesia has committed to eliminating tariff barriers on more than 99 percent of US goods imported into its market, a move expected to benefit American manufacturers, technology firms and agricultural exporters.

Certain Indonesian products will be granted zero-tariff access, including coffee, chocolate, natural rubber and spices, while similar arrangements could extend to other commodities under tariff-rate quotas for textile and apparel products. This provision aims to support key Indonesian industries and balance competitive opportunities on both sides of the Pacific.

Officials described the agreement as a “win-win” for both economies. Jakarta emphasised that the deal strengthens economic cooperation and provides predictable market access for exporters from both countries. For the US, access to Indonesia’s large and growing consumer market — now more than 280 million people — represents a strategic opportunity to expand American exports in sectors such as energy, aerospace and agriculture.

In addition to tariff reductions, the pact includes commitments on non-tariff barriers and regulatory standards. Indonesia has agreed to accept certain US safety and certification standards for vehicles, medical devices and pharmaceuticals, measures that American firms have long sought to ease market entry challenges. Jakarta has also pledged to reduce burdensome local content requirements and other obstacles that previously limited trade flows.

The signing comes amid broader efforts by both governments to strengthen economic ties and manage global supply chain challenges. Indonesian leaders say the deal will help narrow the trade imbalance with the United States and support investment in strategic sectors, including energy and critical minerals, which are crucial for future manufacturing and technology supply chains.

Analysts see the agreement as part of a broader US push to diversify trade links in Southeast Asia and reduce economic dependence on China. For Indonesia, securing a predictable tariff framework with Washington is viewed as a confidence booster for investors and an opportunity to integrate more deeply into global markets, though challenges remain in ensuring equitable benefits for domestic industries.

As both nations prepare to implement the terms of the pact over the coming months, traders, producers and investors will be watching closely to see how tariff adjustments and regulatory changes reshape bilateral commerce in one of Asia’s most dynamic economic partnerships.

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