US President Donald Trump announced on Tuesday that a 19% tariff would be imposed on goods from Indonesia as part of a new trade agreement with the Southeast Asian nation, adding that further deals were in the pipeline. He also offered fresh details on upcoming tariffs targeting pharmaceuticals.
Trump, who has consistently pushed for more favourable trade terms and a reduction in the US trade deficit, described the agreement with Indonesia — a relatively small US trading partner — as part of broader efforts to recalibrate Washington’s global trade relationships. He added that letters setting new tariff rates for dozens of smaller countries would be issued soon.
The accord with Indonesia is one of several the Trump administration has finalised ahead of a looming August 1 deadline, when tariffs on most US imports are scheduled to increase. Meanwhile, the European Union (EU), America’s largest trading partner, is preparing retaliatory measures in the event that talks with Washington break down.
As that deadline approached, negotiations were under way with other nations eager to avoid more US levies beyond a baseline 10% on most goods that has been in place since April.
Trump’s roll-out of the policies has often been chaotic. His moves have upended decades of negotiated reductions in global trade barriers, unsettling international financial markets and threatening a new wave of inflation.
Based on Trump tariff announcements through Sunday, Yale Budget Lab estimated the US effective average tariff rates will rise to 20.6% from between 2% and 3% before Trump’s return to the White House in January. Consumption shifts would bring the rate down to 19.7%, but it’s still the highest since 1933.
Trump outlined an Indonesia deal similar to a preliminary pact struck recently with Vietnam, with a flat tariff on exports to the US roughly double the current 10% and no levies on US exports going there. It also included a penalty rate for so-called transhipments of goods from China via Indonesia and a commitment to buy some US goods.
“They are going to pay 19% and we are going to pay nothing … we will have full access into Indonesia, and we have a couple of those deals that are going to be announced,” Trump said outside the Oval Office. Trump later said on his Truth Social platform that Indonesia had agreed to buy $15 billion of US energy products, $4.5 billion of American farm products and 50 Boeing jets, though no time frame was specified.
He told reporters the deal with Vietnam was “pretty well set” but said it was not necessary to release details.
Trump: India talks moving same way
Indonesia’s total trade with the US – totalling just under $40 billion in 2024 – does not rank in the top 15, but it has been growing. US exports to Indonesia rose 3.7% last year, while imports from there were up 4.8%, leaving the US with a goods trade deficit of nearly $18 billion.
The top US import categories from Indonesia, according to US Census Bureau data from the International Trade Centre’s TradeMap tool, last year were palm oil, electronics equipment including data routers and switches, footwear, car tires, natural rubber and frozen shrimp.
Susiwijono Moegiarso, a senior official with Indonesia’s Coordinating Ministry for Economic Affairs, told Reuters in a text message: “We are preparing a joint statement between US and Indonesia that will explain the size of reciprocal tariff for Indonesia including the tariff deal, non-tariff and commercial arrangements. We will inform (the public) soon.”
Trump had threatened the country with a 32% tariff rate starting August 1 in a letter sent to its president last week. He sent similar letters to about two dozen trading partners this month, including Canada, Japan and Brazil, laying out tariff rates ranging from 20% to 50%, plus a 50% tariff on copper.
Speaking in Pittsburgh on Tuesday, Trump said he favoured blanket tariffs over complicated negotiations, but his Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick were keen to land more trade agreements.
Upon his arrival back in Washington, Trump told reporters that letters would be going out soon for many smaller countries, suggesting they would face a tariff of “a little over 10%.”
He said his administration would also announce tariffs on pharmaceuticals imported into the United States, probably at the end of the month, starting with what he called a low tariff rate to give companies time to move manufacturing to the US before imposing a “very high tariff” in a year or so.
The August 1 deadline gives targeted countries time to negotiate about lower tariff rates. Some economists have also noted Trump’s pattern of backing off his tariff threats.
Since launching his tariff policy, Trump has clinched only a few “framework” agreements, falling short of earlier promises to land “90 deals in 90 days.”
So far, such deals have been reached with the United Kingdom and Vietnam, and an interim deal has been struck with China to forestall the steepest of Trump’s tariffs while negotiations continue between Washington and Beijing.
Trump said talks with India were moving “along that same line,” saying the agreement would give US firms access to the large Indian market.
EU readies retaliation
The breakthrough with Indonesia came as the European Commission, which oversees trade for the EU, prepared to target 72 billion euros ($84.1 billion) worth of US goods – from Boeing aircraft and bourbon whiskey to cars – for possible tariffs if trade talks with Washington fail.
Trump has threatened a 30% tariff on imports from the EU from August 1, a level European officials say is unacceptable and would end normal trade between two of the world’s largest markets.
The list, sent to EU member states and seen by Reuters on Tuesday, pre-dated Trump’s move over the weekend to ramp up pressure on the 27-nation bloc and responded instead to US duties on cars and car parts and a 10% baseline tariff.
The package also covers chemicals, medical devices, electrical and precision equipment as well as agriculture and food products – a range of fruits and vegetables, along with wine, beer and spirits – valued at 6.35 billion euros.
