Indonesia and US Finalise Reciprocal Trade Agreement, Focusing on Exports, Investment and Economic Resilience
The Indonesian and United States governments have officially signed the Agreement on Reciprocal Trade (ART), governing reciprocal tariffs and market access between the two nations. The agreement is the result of intensive negotiations following Washington’s unilateral tariff policy in April 2025.
Haryo Limanseto, spokesperson for the Coordinating Ministry for Economic Affairs, explained in a written statement received on Monday (23 February 2026) that on 2 April 2025, the US government imposed a 32 per cent reciprocal tariff on countries deemed responsible for the US trade deficit, including Indonesia. According to US data, the trade deficit with Indonesia reached USD 19.3 billion in 2024.
“The government assessed that negotiations were necessary to maintain Indonesian export competitiveness and protect approximately four to five million workers directly employed in affected labour-intensive industrial sectors,” he said.
Rather than retaliating, Indonesia chose the path of diplomacy. As a result, on 15 July 2025, a tariff reduction from 32 per cent to 19 per cent was announced through a Joint Statement on the ART Framework. The agreement was subsequently finalised and signed by the presidents of both countries on 19 February 2026.
According to Haryo, the agreement will take effect 90 days after both nations submit written notification that all domestic legal procedures — including consultations with relevant institutions and ratification — have been completed.
The ART is dynamic in nature and may be reviewed or amended at any time based on written agreement between both parties.
Boosting Export Competitiveness
One of the key provisions of the ART is the enhancement of Indonesian export competitiveness. Leading products such as palm oil, coffee, cocoa, rubber and textiles have been granted tariff exemptions for entry into the US market.
A total of 1,819 Indonesian products — comprising 1,695 industrial products and 124 agricultural products — have received preferential tariff treatment. For textile products, the US has provided a tariff reduction scheme down to zero per cent through a Tariff-Rate Quota (TRQ) mechanism.
“With zero per cent tariffs on a number of key commodities, Indonesian export competitiveness in the US market will increase significantly,” Haryo said.
Encouraging Investment and the Business Ecosystem
Beyond tariffs, the ART also encompasses investment facilitation, particularly in high-technology sectors such as ICT, medical devices and pharmaceuticals. The government will adjust local content requirement (TKDN) policies, domestic specifications and undertake deregulation to improve the ease of doing business.
Indonesia has also affirmed its commitment to implementing Strategic Trade Management to ensure the security of the business ecosystem and prevent the misuse of high-technology goods.
Meanwhile, the easing of imports and standardisation of US agricultural products is expected to improve the efficiency of industrial raw materials whilst supporting national food security.
The government has also opened investment opportunities by relaxing foreign ownership limits for US companies in certain sectors, including mining divestment and several financial services subsectors.
Broad Market Access for US Products
As part of the agreement, Indonesia is granting market access of up to 99 per cent for US products at zero per cent tariffs effective upon Entry Into Force (EIF). The government has also committed to removing various non-tariff barriers, including import licensing, TKDN requirements, recognition of US standards and halal certification.
To maintain trade balance and meet domestic needs, Indonesia will increase energy purchases from the US, including metallurgical coal, LPG, crude oil and refined petrol.
Additionally, Indonesia plans to purchase aircraft along with components and aviation services, and to increase imports of US agricultural products as raw materials for the food, beverage and textile industries.
Haryo emphasised that all provisions within the ART are designed to maintain national economic stability, strengthen export competitiveness and create a more conducive investment climate amid the dynamics of global trade.