But experts said the deal appeared to be one-sided.
“The 19 percent tariff on Indonesian exports to the US, while the US can enjoy 0 percent actually poses a significant risk to Indonesia’s trade balance. Do not be too reliant on exports to the US, because the result of the tariff negotiation is still detrimental to Indonesia’s position.”
By AFP
July 16, 2025
Indonesia's President Prabowo Subianto said he had a 'very good' call with Trump - Copyright AFP/File Yasuyoshi CHIBA
Marchio GORBIANO
Indonesia’s leader on Wednesday hailed a “new era” of trade relations with the United States, after Donald Trump said he slashed the tariff rate faced by Southeast Asia’s biggest economy from 32 percent to 19 percent.
The Trump administration has been under pressure to wrap up trade pacts after promising a flurry of deals recently, as countries sought talks with Washington to avoid the US president’s threatened tariffs announced in April but delayed until August.
“I had a very good call with President Donald Trump. Together, we agreed and concluded to take trade relations between Indonesia and the United States into a new era of mutual benefit,” President Prabowo Subianto wrote in an Instagram post.
Prabowo, a populist former general, posted pictures of himself laughing on the phone with Trump but did not give any specifics of the deal.
However Prabowo’s presidential spokesman confirmed the new 19 percent rate and said it took place after direct negotiations between the Indonesian leader and Trump.
“It is an extraordinary negotiation conducted directly by our president with President Donald Trump,” Hasan Nasbi said, adding that the deal was “progress that cannot be called small”.
Prabowo was set to land back in Indonesia on Wednesday afternoon from a trip to Europe, before giving a statement, Nasbi said.
Trump said Tuesday he had struck the pact in return for significant purchase commitments from Jakarta following negotiations, including a pledge to buy 50 Boeing jets.
In return for a lower tariff, Indonesia has committed to spending billions to increase energy, agriculture and merchandise imports from the United States.
Trump and Prabowo have developed a warm relationship since the US leader first clinched the presidency in late 2016.
His first administration dropped a de facto US visa ban for Prabowo over alleged crimes committed under late dictator Suharto, inviting him to Washington in 2020 when he was Indonesian defence minister.
– ‘Significant risk’ –
Prabowo had sent his top economic minister to Washington and his administration secured a better deal than the 20 percent that Trump said he had given to Southeast Asian neighbour Vietnam.
Both Indonesia and Vietnam are key markets for the transshipment of Chinese goods. Trump said the deal with Indonesia would include a penalty for goods transiting Indonesia from China.
Prabowo had suggested after the initial tariff threat in April that Trump was maybe helping Jakarta by causing it to re-think its trade surplus with the world’s top economy.
Data from the US Trade Representative office shows Washington’s goods trade deficit with Indonesia was $17.9 billion in 2024, up 5.4 percent from the year before.
But experts said the deal appeared to be one-sided.
“The 19 percent tariff on Indonesian exports to the US, while the US can enjoy 0 percent actually poses a significant risk to Indonesia’s trade balance,” said Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies.
“Do not be too reliant on exports to the US, because the result of the tariff negotiation is still detrimental to Indonesia’s position.”
Indonesian shoemakers fear Trump tariffs despite lower levy
By AFP
July 16, 2025
Tegep Boots has many dedicated customers in the United States and Europe - Copyright AFP Timur MATAHARI
Yuli Krisna
At a leather boot shop in the Indonesian city of Bandung, workers handle an order from Texas but owner Etnawati Melani says she fears such business will dwindle when Donald Trump’s tariffs hit exports.
The United States is Indonesia’s biggest market for footwear exports and the American president announced Tuesday he would impose 19 percent tolls on top of a baseline 10 percent for Southeast Asia’s biggest economy.
The measure was lower than the initial extra 32 percent Trump threatened in April, and better than the 20 percent he imposed on Vietnam.
But Etnawati, who had plans to expand her business to the United States, said her focus would now shift to other markets.
“I have to develop a new strategy. Perhaps we have to diversify our markets, products, and so on. If it’s possible to enter (the US market), but… not in large quantities at first, that’s it,” she told AFP.
“We can’t rely solely on the US. There’s still many markets in the world. We can still shift.
“I plan to shift focus to Japan and Russian partners.”
In return for a lower tariff, Indonesia pledged billions to increase energy, agriculture and merchandise imports from the US and Trump said Jakarta had pledged to buy 50 Boeing jets.
It remains unclear when the new tariff rate Trump announced will come into effect and reaction from Indonesian officials has been muted while President Prabowo Subianto travels home from a Europe visit.
But chief negotiator Airlangga Hartarto, after meeting top US officials in Washington, said last week that the talks had been “positive”.
Prabowo suggested after the initial tariff threat in April that Trump was maybe helping Jakarta by causing it to re-think its trade surplus with the world’s top economy.
Data from the US Trade Representative office shows Washington’s goods trade deficit with Indonesia was $17.9 billion in 2024, up 5.4 percent from the year before.
– ‘I’m worried’ –
Indonesia is the third-largest footwear exporter to the US behind China and Vietnam, according to the Observatory of Economic Complexity.
So any new tariff was likely to damage business — particularly in Bandung, where its shoe scene is well-known internationally for beautifully hand-crafted quality leather boots.
Economists in Indonesia hit out at the deal with Washington, which Trump says would get tariff-free access in return.
“This is not an agreement. It’s… a one-sided agreement,” Jakarta-based Centre for Strategic and International Studies (CSIS) executive director Yose Rizal Damuri told AFP on Wednesday.
But he predicted American consumers would likely bear the costs more than Indonesian businesses, with Trump’s tariffs sweeping across many countries.
“The United States itself will be the one more affected. Prices will rise,” he said.
Data on Tuesday showed US inflation spiked in June as the tolls kicked on.
The shop’s more seasoned workers such as Jajang — who goes by one name — have already experienced the ups and downs of business, with the Covid-19 pandemic hitting sales, and seeing dozens of colleagues laid off and several dying.
“I don’t know about that issue, the important thing is that I work here,” said the 53-year-old when asked about Trump’s levies.
Others aware of the Trump threat to Indonesian exports were more concerned.
One of Etnawati’s workers, Lili Suja’i, chipped away at a new set of boots for the three-pair Texan order — riding boots, medium casual boots and loafers — in a workshop adjacent to the store.
He said he feared US customers would be put off by higher costs, with the shop his main income for his family of three.
But the shoemakers are ready to fulfil any orders from Americans willing to pay the extra price.
“I’m worried, yes, but before placing an order, we negotiate the shipping costs and prices with the customer,” the 38-year-old said.
“So, we’ve already made a deal. If they’re OK with it, we’ll do it.”
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