JAKARTA, Indonesia (BN24) — Indonesia announced Tuesday that the United States has agreed in principle to exempt Indonesian palm oil, cocoa and rubber exports from the 19% tariff imposed under President Donald Trump’s trade policy, a move Jakarta says will strengthen trade ties and boost Southeast Asia’s largest economy.
Airlangga Hartarto, Indonesia’s coordinating minister for economic affairs and top trade negotiator, told Reuters that the deal will reduce tariffs on key commodities “to zero or close to zero” once the final agreement is signed. While no firm timeline has been set, he said Washington has given assurances that the exemption will move forward despite the U.S. currently being engaged in tariff talks with other trading partners.
“This is a principal agreement for products not produced in the U.S., such as palm oil, cocoa and rubber,” Airlangga said, noting that the arrangement will ease pressure on Indonesia’s vital export industries.
The U.S. embassy in Jakarta declined to comment.
Indonesia eyes trade certainty and investment
Indonesia, the world’s top palm oil exporter and a leading global rubber supplier, has pushed aggressively for tariff certainty since last year, when Trump imposed uniform duties on a range of imports. Jakarta was among the first nations to seek a tariff deal in July but was ultimately hit with the same 19% rate as Thailand and Malaysia, just below Vietnam’s 20%.
During negotiations, Indonesia offered billions of dollars in investments and purchases of U.S. crude oil, liquefied petroleum gas, airplanes and agricultural products. Jakarta also committed to eliminating tariffs on nearly all American goods entering its market.
Airlangga said tariff stability with the U.S., along with progress in free trade talks with the European Union, will support Indonesia’s plan to lift economic growth to 5.4% in 2026, up from about 5% projected this year.
“Certainty is what global investors are looking for, and Indonesia provides that stability,” he said.
Expanding commodity processing and energy deals
Beyond tariffs, discussions also focused on U.S. investment in Indonesia’s energy infrastructure. Airlangga confirmed that Jakarta is seeking American participation in new fuel storage projects in partnership with state energy company Pertamina and the sovereign wealth fund Danantara.
Indonesia is also working to attract investment into industrial processing for its raw commodities. Airlangga highlighted the government’s success in bringing Chinese capital into nickel processing projects and said Jakarta wants to replicate that with palm oil, cocoa and rubber.
He added that the government is encouraging investment in silica sand processing to support domestic production of solar panels and semiconductor wafers, positioning Indonesia as a player in renewable energy and high-tech supply chains.
Reuters
