PALMOILMAGAZINE, JAKARTA — Indonesia’s strategic efforts to enhance international trade have taken a significant step forward. On July 22, Indonesia and the United States officially issued a Joint Statement, marking the outcome of long-standing bilateral negotiations over trade tariff policies.
As part of the agreement, Indonesia secured a tariff reduction from 32% to 19%. While still among the more conservative reductions compared to those granted to other countries with trade deficits with the U.S., this milestone paves the way for Indonesia’s top export commodities to re-enter and compete in the American market.
The United States remains one of Indonesia’s largest trading partners, accounting for 11.22% of Indonesia’s total exports in 2024. Beyond trade, the U.S. is also a key source of foreign direct investment (FDI), contributing US$ 3.7 billion in the same year.
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New Opportunities for Strategic Exports
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated during a press conference on Thursday (July 24) that the Joint Statement serves as a solid political and diplomatic foundation for a future trade agreement. Though still at the early stages, the deal signals a shared commitment to building a more balanced and mutually beneficial trade relationship.
“Technical discussions will continue to determine which commodities will benefit from lower tariffs—some potentially close to zero,” Airlangga explained. “These include palm oil, coffee, cocoa, agro-mineral products, aircraft components, and industrial goods from designated regions.”
This development is a promising sign for Indonesia’s strategic commodities, particularly palm oil, which has long faced tariff pressures and negative campaigns in global markets. Lower tariffs could unlock greater access for crude palm oil and its derivatives—such as oleochemicals and biodiesel—to the U.S. market.
The same applies to coffee and cocoa—key exports from regions such as Sumatra, Sulawesi, and Papua. The agreement could become a catalyst for growing Indonesia’s export volume and encouraging downstream industrial development domestically.
Beyond increasing export numbers, the government aims to use this agreement to boost national competitiveness through innovation, capacity building, and investment in research and development. The trade partnership is also expected to accelerate the country’s digital economic transformation and enhance logistics efficiency across regions.
“This cooperation is not just about maintaining our trade balance—it’s also about sustaining economic growth and job creation, particularly in labor-intensive sectors,” Airlangga emphasized.
He noted that the previous 32% tariff level effectively crippled trade activities. “It was practically a trade embargo. If left unaddressed, the impact could have been severe—potentially affecting more than a million workers in labor-intensive industries.”
Currently, the Indonesian government is engaged in the next phase of negotiations, focusing on drafting a list of commodities eligible for special tariff treatment. The goal is to enhance the competitiveness of Indonesia’s export-oriented industries and better integrate them into global supply chains. (P2)
