Indonesia’s President Prabowo Subianto on Wednesday celebrated what he called a “new era” in trade relations with the United States, after President Donald Trump agreed to cut tariffs on Indonesian goods from 32 percent to 19 percent.
The deal comes as the Trump administration scrambles to finalize several trade agreements before an August 1 deadline, after threatening steep tariffs on countries that fail to reach terms with Washington.
“I had a very good call with President Donald Trump. Together, we agreed and concluded to take trade relations between Indonesia and the United States into a new era of mutual benefit,” Prabowo wrote on Instagram, posting photos of himself smiling on the phone.
After returning from a trip to Europe, Prabowo confirmed the new tariff rate to reporters and said he might visit Washington in September or October. “We agreed… the tariffs to be lowered from 32 (percent) to 19 (percent),” he said.
Hasan Nasbi, Prabowo’s spokesperson, described the outcome as “an extraordinary negotiation conducted directly by our president with President Donald Trump,” calling it “progress that cannot be called small.”
For his part, Trump framed the reduction as part of a wider deal that includes Indonesia’s pledge to buy 50 Boeing jets and boost imports of U.S. energy, agricultural products, and other goods, amounting to billions of dollars.
Indonesia is the largest economy in Southeast Asia and a major trading partner for the U.S. Washington’s trade deficit with Jakarta rose 5.4 percent in 2024 to $17.9 billion, according to U.S. Trade Representative data.
Trump noted that the agreement with Indonesia slightly undercuts the 20 percent tariff rate he offered Vietnam, another key Southeast Asian economy.
Both Indonesia and Vietnam are important conduits for Chinese goods moving into global markets. Trump said the deal with Jakarta includes provisions to penalize transshipments of Chinese products through Indonesia.
Prabowo, a populist former general who has cultivated a close rapport with Trump since 2016, was previously invited to Washington as defense minister in 2020 after a long-standing visa ban against him was lifted. He has defended Trump’s trade tactics, suggesting earlier this year that the U.S. pressure may help Indonesia rebalance its trade surplus with America.
The agreement marks one of the first concrete trade deals the Trump administration has secured in its latest round of negotiations and, as Prabowo described it, the beginning of “mutual benefit” between the two countries.