President Donald Trump and Indonesian President Prabowo Subianto finalized a trade deal on Thursday, ending months of uncertainty with a deal expected to reduce U.S. tariffs and allow Jakarta to buy an estimated $33 billion in U.S. goods.
The leaders “reaffirmed their firm commitment to implement” the agreement and instructed their teams to “take further steps for a NEW GOLDEN AGE of the ever-growing US-Indonesian alliance” when they met on the sidelines of the inaugural Peace Council meeting in Washington, according to a White House statement.
Under the deal, Indonesia – a Group of 20 country that counts the US as its second-largest export destination – will avoid threatened 32% tariffs and instead face a 19% rate on most goods.
The agreement also removes increased tariffs on some of Indonesia’s exports, including palm oil, spices and pharmaceuticals. It creates a mechanism for some textiles and clothing to receive tariff exemptions – boosting a key Indonesian industry.
For the US, the pact aims to expand access to a fast-growing consumer market of more than 280 million people and bring Indonesian companies to source more from the US.
Indonesia will eliminate tariffs on more than 99% of U.S. goods and remove non-tariff barriers, while Indonesian businesses are expected to buy more U.S. energy, agricultural products and other goods – moves to reduce Indonesia’s roughly $16 billion trade surplus with the U.S.
The deals include $15 billion in US energy imports, including $3.5 billion in liquefied petroleum gas, $4.5 billion in crude oil and $7 billion in refined gasoline. Indonesia is also expected to procure $13.5 billion in commercial aircraft, which should benefit Boeing Co. And Jakarta agreed to import $4.5 billion in US agricultural commodities — including cotton, soybeans, wheat, beef, rice and corn — as part of the deal.
Indonesia is also reforming its pre-shipment inspection processes to address concerns raised by US exporters and eliminate tariffs and digital service fees. And Indonesia said it would “seek to facilitate” $10 billion in outbound direct investment into the US, including engineering and construction projects as well as energy initiatives, including the development of blue ammonia.
“President Trump is unlocking Indonesia’s market of more than 285 million people to create commercially meaningful opportunities for American farmers and manufacturers,” U.S. Trade Representative Jamieson Greer said in a statement. “This landmark agreement breaks down trade barriers while advancing the economic and national security interests of the American people.”
In addition to tariffs, the deal touches on critical minerals as the US seeks to reduce supply chain dependence on China and secure inputs for electric cars, defense and manufacturing. Indonesia said it would allow US companies to mine critical minerals on terms similar to those for domestic investors, while Washington promised to consider offering investment financing through the Export-Import Bank and the US International Development Finance Corporation.
The nations reached a framework last July in which Indonesia agreed to remove tariffs on more than 99% of US goods and eliminate non-tariff barriers, while the US reduced tariffs on Indonesian products to 19% from a threatened 32%.
The agreement helps maintain trade relations between the two countries, whose annual bilateral trade is more than $40 billion.
For the U.S., the deal lowers barriers to sales to the world’s fourth-most populous nation and could give U.S. companies a more level playing field in a market that is trying to attract manufacturing and other investment from firms considering diversifying their China-focused supply chains.
Trump said in July that he had reached a deal with Indonesia, but the signature stalled at the end of 2025, with US officials saying Indonesia was backtracking on some commitments. Indonesian officials attribute the delay to a US government shutdown and said talks are proceeding smoothly.
As for Indonesia, the deal also comes as the country faces market headwinds after MSCI Inc. warned about the attractiveness of the stock market, and Moody’s downgraded its sovereign credit outlook, citing political uncertainty and weak governance under the Prabow government. Questions about a possible government takeover of one of the country’s biggest gold mines added to investor concerns.
Lower tariffs could help support foreign currency inflows at a time when the rupee is trading near an all-time low against the dollar and economic growth remains tepid.
The signing came during Prabowo’s third visit to Washington since taking power in October 2024. Prabowo also attended a meeting of the Peace Council, a body organized to help rebuild and stabilize Gaza. Indonesia, the world’s largest Muslim country, said it was preparing up to 8,000 troops for a possible peacekeeping mission in the territory.