Former US President Donald Trump has announced a new tariff agreement, this time with Indonesia.
Trump stated that he had agreed to reduce tariffs he had previously threatened on goods entering the US from Indonesia to 19%, in exchange for what he termed “full access” for American firms.
As of yet, the terms of the deal have not been formally confirmed by Indonesian officials. The Southeast Asian nation maintains a relatively small, but growing, trade relationship with the United States.
This agreement is the latest to emerge following the White House’s unveiling of a series of tariffs earlier this year, which initiated a series of trade discussions regarding these duties.
After initially suspending his most aggressive tariff proposals, Trump renewed his threats this month, sending warning letters to numerous countries indicating his intention to impose high tariffs beginning August 1.
His targets encompassed some of America’s largest trade partners, including the European Union, Canada, Mexico, Japan, and South Korea.
Indonesia also received a letter from Trump last week outlining plans for a 32% tariff on its goods, reportedly surprising officials who believed an agreement was imminent.
Trump stated on Tuesday that he had reduced that rate following a phone conversation with the President of Indonesia.
He indicated that, as part of the agreement, Indonesia had consented to lower its trade tariffs on products from the US, which America has previously asserted were excessively high for numerous agricultural products, as well as certain manufactured goods.
“They are going to pay 19% and we are going to pay nothing… we will have full access into Indonesia,” he stated.
He later added on social media that the country had also agreed to purchase $15 billion worth of US energy, $4.5 billion in American agricultural products, and 50 Boeing jets.
These figures are lower than those outlined in a trade deal that Reuters reported earlier this month was expected to be signed.
Indonesia is ranked as one of America’s top 25 trade partners, exporting approximately $28 billion worth of goods to the US last year, including clothing, footwear, and palm oil.
Stephen Marks, an economics professor at Pomona College in California, suggested that the benefits of the deal for Indonesia “are more political than economic.”
“Certainly, [the US does] have some major imports categories from Indonesia – electonics, apparel, footwear, palm oil products which are used in cosmetics,” he said.
“Relative to total trade, the US is a significant importer from Indonesia, though not as great as some of its Asian trading partners.”
In addition to Indonesia, the administration has announced agreements with only the UK, China, and Vietnam. In all three of these cases, the deals maintained high US tariffs while key issues and terms remained unconfirmed or unresolved.
Everett Eissenstat, a partner at Squire Patton Boggs who served as an economic advisor during the first Trump administration, anticipates that the White House will unveil more deals in the coming weeks, while noting that many countries appear to have lowered their expectations regarding what they hope to achieve.
He pointed to recent comments on Tuesday by Canadian Prime Minister Mark Carney, which raised the possibility that the country might accept tariffs at levels once considered unthinkable.
“The tone is changing a lot,” he said, adding that he thought a deal was better than no deal.
“For governments, I think it’s best to be at the negotiating table rather than to walk away,” he added.
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