Indonesia says zero-tariff US farm imports won't hurt local industry

He emphasised that essential commodities, including soybeans, wheat and cotton, are critical raw materials that are not produced locally in sufficient quantities.

“These commodities are primarily utilised as industrial raw materials,” Santoso said on Friday, adding that with the US being Indonesia’s largest source of soybeans and a major supplier of wheat, imposing trade barriers would only penalise domestic industries.

The Minister explained that eliminating tariffs is a strategic move to suppress import costs and production expenses, ultimately ensuring consumer prices remain stable.

Lowering the cost of raw materials translates to more affordable finished goods. Conversely, high input costs inevitably drive up food inflation, he noted.

Soybeans and wheat are foundational to Indonesia’s food and beverage sector, serving as the primary ingredients for national staples such as tofu, tempeh and instant noodles.

The policy aims to secure a consistent supply chain, stabilise market prices and foster industrial resilience.

This measure is a key component of the Indonesia-US Agreement on Reciprocal Trade (ART), which establishes a zero per cent tariff framework for specific agricultural goods to streamline bilateral trade flows.

Coordinating Minister for Economic Affairs Airlangga Hartarto added that the policy is a vital safeguard for household purchasing power, preventing “inflationary shocks” on everyday food products.

The agreement was formalised in Washington, D.C., on 19 February by President Prabowo Subianto and US President Donald Trump.

According to Cabinet Secretary Teddy Indra Wijaya, both leaders hailed the pact as a milestone for economic security and a catalyst for a “new golden era” in the US-Indonesia strategic partnership.