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A landmark U.S.-Indonesia trade agreement announced in July is now in jeopardy, as U.S. officials say Indonesia is stepping back from critical commitments made during negotiations. According to a U.S. official speaking on condition of anonymity, Jakarta is now questioning several elements of the deal, raising concerns in Washington about the future of the agreement.
The original deal, unveiled on July 15 and touted by President Donald Trump as a major victory for American industries, included Indonesia’s pledge to remove tariffs on more than 99% of U.S. goods and eliminate non-tariff barriers that have long hindered American companies. In return, the United States agreed to scale back proposed tariffs on Indonesian exports to 19% from 32%.
However, U.S. Trade Representative Jamieson Greer was recently informed by Indonesian officials that the country cannot commit to certain binding provisions and is seeking to reframe its obligations. U.S. officials fear that altering these terms would result in a weaker agreement than those recently finalized with Malaysia and Cambodia. Both countries had cooperated closely with the U.S., with Malaysia notably removing thousands of tariff lines to facilitate smoother trade flows.
A report by the Financial Times indicated that Indonesia may be retreating from commitments to dismantle non-tariff barriers on key U.S. industrial and agricultural exports, as well as its promises to address digital trade challenges—an increasingly vital area in global commerce.
U.S. Treasury Secretary Scott Bessent echoed these concerns last week, describing Indonesia as “recalcitrant” regarding the deal, though he offered no further details. With negotiations at a sensitive stage, no official comment has yet been released by the U.S. Trade Representative’s office.
As both nations navigate this setback, the future of the trade pact remains uncertain, raising questions about potential impacts on U.S. exporters, regional trade dynamics, and ongoing economic cooperation between Washington and Jakarta.
