Indonesia reaches tariff deal with Donald Trump, but is it a win-win?
The US would pay no tariffs to Indonesia under the deal, while goods from the South-east Asian nation would face a 19 per cent levy.
Mr Trump had threatened Jakarta with a 32 per cent tariff rate, effective August 1, in a letter sent to Indonesian President Prabowo Subianto last week.
Indonesia runs a trade surplus with Washington, meaning the value of the goods it sells to the US (footwear, clothing, palm oil and rubber) brings in more money than what Indonesia pays to America for things such as oil and gas, electronic products, aircraft components, cereals and pharmaceuticals.
In 2024, the difference was close to $US18 billion in Indonesia's favour.
What's in the new deal?
In exchange for the tariff reduction, Mr Trump said Indonesia agreed to purchase 50 Boeing aircraft, primarily from the 777 series.
Furthermore, the Indonesian government plans to import US energy commodities valued at $US15 billion and US agricultural products worth $US4.5 billion.
"For the first time ever, our Ranchers, Farmers, and Fishermen will have Complete and Total Access to the Indonesian Market of over 280 million people... U.S. Exports to Indonesia will be Tariff and Non-Tariff Barrier Free," Mr Trump declared.
Donald Trump said he discussed the deal directly with Indonesia's President Prabowo Subianto. ( AP: Eraldo Peres )
Is it a good deal for Indonesia?
Mr Prabowo hailed a "new era of mutual benefit" while Indonesian Trade Minister Budi Santoso said the new tariff has the potential to attract significant investment to Indonesia.
He said this week: "We have two things that we can gain: investment inflow, and secondly, an increase in our exports."
However, Bhima Yudhistira, Executive Director of the Centre of Economic and Law Studies (Celios), told Tempo news website that the agreement disadvantages Indonesia.
"[It] actually carries a high risk for Indonesia's trade balance," he said, adding that while exports would benefit, there was a danger American imports could increase dramatically.
He said the agreement didn't compare well to Vietnam's deal signed on July 3.
'The difference between Indonesia's and Vietnam's tariffs is only 1 per cent, but Vietnam's manufacturing competitiveness is superior. In this case, we lose,' he told The South China Morning Post.
A win-win was unlikely
Poppy S Winanti, Professor of International Relations at Universitas Gadjah Mada in Yogyakarta, said the current deal on the surface seemed favourable, especially given the initial 32 per cent threat.
'At 19 per cent, Indonesia's tariffs are among the lowest in ASEAN and are competitive with main rivals in the US market, such as Vietnam," she said.
'However, for Indonesian producers, any additional tariffs above previous levels are already burdensome.
'Still, we should recognise that since negotiations began, a win-win outcome was unlikely.
'The Indonesian government's aim was probably to minimise damages, complemented by efforts to mitigate impacts in the short, medium, and long term. In the short term, support should go to domestic producers directly affected, while medium- and long-term strategies include strengthening regional cooperation through Regional Comprehensive Economic Partnership Agreement and expanding Indonesia's market to other countries.''
Barbies made in Indonesia displayed on a US supermarket shelf. ( AP: Andres Kudacki )
Professor Wisanti said it was essential to examine what opening the Indonesian market to more American products might mean.
'Including ... how to ensure these products are genuinely needed by the Indonesian industry and economy, or whether they are merely replacing or competing with locally produced goods and commodities,' she said.
'Even if markets are opened for US products, they can benefit the domestic economy if there is a genuine demand from local industries. However, if many of these products are similar to or could be produced locally, the impact could be negative.''
What next?
Monash Business School professor Robert Brooks said the US would now be keen to arrange as many of the deals as possible.
'If arrangements have been reached with Vietnam and Indonesia that will provide incentives to complete a broader range of deals across South-east Asia,' he said.
Indeed, Kevin Hassett, Mr Trump's top economic adviser, told Fox News that "a whole bunch" of additional trade deals would be announced very soon, but gave no details.
He said Trump's strict August 1 deadline had spurred a flurry of new activity, including talks with countries that had not previously been in touch.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ABC News
an hour ago
- ABC News
Donald Trump made MAGA a promise on the Epstein files. They are holding him to it
We may have just arrived at a line MAGA seems unwilling to follow Donald Trump over. It used to be that when politicians went back on their word, the people who elected them noticed, cared, reacted and pulled support and so the decision is sometimes reversed. For the President of the United States it is unchartered territory. Routinely, when he breaks a promise, his devout MAGA base has been inclined to forgive and selectively forget. Trump was the law and order presidential candidate who was also a felon. He said the United States wouldn't get involved in foreign wars and then bombed Iran. He said he would end the war in Ukraine in one day and then he announced he'll send Kyiv more Patriot missiles, albeit this time with an invoice. But he also taught his supporters to love conspiracy theories and hate the politicians who star in them. Perhaps without the humility to wonder if he'd one day be centre stage. The Epstein files are American conspiracy theory lore and the loudest voices in the most right-wing factions of the MAGA movement want them released to the public. Donald Trump used that momentum during his campaign, promising to release all documents compiled during the investigation into Epstein. It would be easy to say MAGA heavyweights would never accept anything less, but so many of them have tied themselves in knots to justify Trump's broken promises in the past. But the past few days have suggested the Epstein files might be different. After attempting to downplay the documents, Donald Trump tried convince his base to forget about them, only to then insult those who wouldn't and eventually perform somewhat of a backflip — ordering his Attorney General Pam Bondi to release all "pertinent" grand jury testimony related to the case. It remains to be seen whether that will be enough, but the move itself suggests the president may know the answer to a question that's been playing on repeat in the minds of Washington watchers since day one: Is there anything Donald Trump could do that would shake MAGA's love for him? Perhaps the president now believes crossing the line and becoming one of the powerful figures who keep the secret of the Epstein files could well have been it. That's the thing about dabbling in conspiracies — many are indeed theories, but some are true. Or more potent still, they start with something that is true. In 2008, high-flying financier Jeffrey Epstein pleaded guilty to state charges in Florida of soliciting and procuring a minor for prostitution. He was listed as a sex offender, but avoided a possible life sentence, instead serving 13 months in a work-release program. Epstein was later charged by federal prosecutors in Manhattan for nearly identical allegations in 2019, but he took his own life while in federal custody as he awaited trial. Years later, British socialite Ghislaine Maxwell was convicted of luring teenage girls to be sexually abused by Epstein. During her trial, some names came up. For example, pilots took the witness stand and dropped very well-known names — Prince Andrew, Bill Clinton, Donald Trump — who flew on Epstein's private jets. From the available evidence, theories have grown. And there has long been a theory that Epstein's "client list" not only existed but was being buried by the state. From opposition, that was a convenient theory to jump on for Trump. It played into the character he'd created for himself because it allowed him to style himself as the president that would get to the bottom of it . But earlier this month, Donald Trump's Department of Justice, as well as the FBI, released a memo saying their review found there was no "incriminating client list" and "no credible evidence found that Epstein blackmailed prominent individuals as part of his actions". This is not what MAGA expected to hear from their president and try as he might to distract them, they were not showing any signs of forgiving or forgetting. At a conservative conference held just days ago, commentators Megyn Kelly and Charlie Kirk discussed the memo and the actions of the Trump administration. "One of the main reasons that we voted Trump in was because we wanted real answers on real stories and we didn't want to be BS'ed anymore with a bunch of nonsense from our government that treated us like a bunch of stooges," Kelly said. "I believe Trump is still loyal to that mission and maybe the people who are behind that memo are loyal to that mission, too, but this ain't it." She said those in charge knew "the base has been led ... with a trail of breadcrumbs to believe something else for years". The pair called for all files, excluding those containing child sexual assault material, to be unsealed and released. "I think every file should be released to the public the same way as the JFK files. Let the American people decide," Kirk said. Donald Trump tried to tell his base the Epstein list didn't exist — just as he's tried to tell them what to believe in the past. But this story is well and truly in show, not tell, territory. It's not so much about what, or who, is on the list, as it about the transparency Trump promised and the base demands. Let us remember, that just one month after Donald Trump was elected for the first time, and still weeks before he would be sworn in as president, a man drove himself from North Carolina to Washington DC and stormed a pizza shop with an assault rifle. That man believed the Comet Ping Pong pizzeria on the capital's leafy Connecticut Avenue was actually a front for a child sex ring led by Hilary Clinton. This man was so adamant the former secretary of state was involved in crimes against children, he drove hours to "self-investigate" the conspiracy theory. What he found was a line up of wood-fired thin crusts and a terrified employee caught up in what is now known as "pizzagate". The idea that children are preyed upon by a ring of powerful people and that the government is involved in its cover-up has proven to be incredibly powerful in the past. It has compelled people to bear arms. It is not the sort of thing those with conspiratorial minds easily forget or can be talked out of with a few lines in a Truth Social post. When Donald Trump said the Epstein client list didn't exist, he really just added fuel to a conspiracy theory's fire. It might have been a surprise for the president who largely enjoys being believed by his base. But the political capital you can derive from conspiracy theories about the deep state becomes more of a liability when you are the person in charge and promised you'd be different. Trump has bigger fish to fry as the Murdoch-owned Wall Street Journal alleges further ties between him and Epstein, but his base has not been moved by his association with the sex offender in the past. Nor has it been swayed by criminal convictions or a civil jury that found Trump did sexually abuse E Jean Caroll in the 1990s. Donald Trump can be a criminal, but the reaction from MAGA over the past week tells us he cannot be seen to be protecting them, theoretical or not.
ABC News
an hour ago
- ABC News
Cambodian elites complicit in cybercrime despite latest government crackdown, experts warn
A crackdown by Cambodian authorities on cybercrime operations has resulted in the arrests of more than 1,000 suspects in the past week. The South-East Asian country's Prime Minister Hun Manet issued the order authorising state action for "maintaining and protecting security, public order, and social safety", and threatened job losses if law enforcement failed to act. "The government has observed that online scams are currently causing threats and insecurity in the world and the region," Hun Manet said in a statement. "In Cambodia, foreign criminal groups have also infiltrated to engage in online scams." More than 1,000 people were arrested in raids in at least five provinces between Monday and Wednesday, according to statements from Information Minister Neth Pheaktra and police. Transnational crime expert Jacob Sims said like previous mass raids in 2022 and 2024, this latest government crackdown appeared "fully performative" and blaming foreign actors was a "constant refrain". He said that even if the public was to believe the figure which it had yet to be independently verified, it made up less than 1 per cent of the total cybercriminal workforce which he estimated to be about 150,000. Mr Sims's 2025 report into Cambodia's transnational crime estimated that the cyberscam industry was worth $19 to $29 billion and contributed 60 per cent of the country's gross domestic product. Mr Sims said there was "no evidence the government was serious about tackling the industry". If anything, he criticised the Cambodian government for enabling the sector to proliferate because the ruling elite "depended on the criminal profits to sustain their grip on power". The suspects detained in the latest crackdown in the capital Phnom Penh and the southern city of Sihanoukville reportedly included 85 Cambodians, more than 200 Vietnamese, 27 Chinese, and 75 suspects from Taiwan. Police also seized equipment, including computers and hundreds of mobile phones. At least 270 Indonesians, including 45 women, were arrested on Wednesday in Poipet, a town near the Thai border that was notorious for cyberscam and gambling operations, the information minister said. Elsewhere, police in the north-eastern province of Kratie arrested 312 people, including nationals of Thailand, Bangladesh, Indonesia, Myanmar and Vietnam. Twenty-seven people from Vietnam, China and Myanmar were also arrested in the western province of Pursat. Last month Amnesty International published the findings of an 18-month investigation into cybercrime in Cambodia, which the human rights group said "point towards state complicity in abuses carried out by Chinese criminal gangs". "The Cambodian government is deliberately ignoring a litany of human rights abuses including slavery, human trafficking, child labour and torture being carried out by criminal gangs on a vast scale in more than 50 scamming compounds located across the country," it said. Many of those freed from South-East Asian scam centres say they were trafficked or lured there under false pretences. There are at least 53 scam compounds in Cambodia where organised criminal groups carried out human trafficking, forced labour, child labour, torture, deprivation of liberty and slavery, the Amnesty report said. Mr Sims said the government also used a number of mechanisms that sustained the industry like encouraging criminal migration via a corrupted "citizenship by investment scheme", facilitating human trafficking through Phnom Penh's international airport, and the use of Cambodian security services to guard compounds. He said tip-offs reported to the government were not acted upon and none of the key compounds had been raided. He said the world was now experiencing the harm that Cambodia's rulers previously only inflicted domestically. The Cambodian government did not respond to the ABC's request for comment. ABC/AFP
News.com.au
an hour ago
- News.com.au
US Congress approves $9 bn in Trump cuts to foreign aid, public media
US Republicans early Friday approved President Donald Trump's plan to cancel $9 billion in funding for foreign aid and public broadcasting, vowing it was just the start of broader efforts by Congress to slash the federal budget. The cuts achieve only a tiny fraction of the $1 trillion in annual savings that tech billionaire and estranged Trump donor Elon Musk vowed to find before his acrimonious exit in May from a role spearheading federal cost-cutting. But Republicans -- who recently passed a domestic policy bill expected to add more than $3 trillion to US debt -- said the vote honored Trump's election campaign pledge to rein in runaway spending. "President Trump and House Republicans promised fiscal responsibility and government efficiency," House Speaker Mike Johnson said in a statement just after the vote. "Today, we're once again delivering on that promise." Both chambers of Congress are Republican-controlled, meaning a mostly party-line House of Representatives vote of 216 to 213, moments after midnight, was sufficient to approve the Senate-passed measure. The bill now heads to the White House to be signed by Trump, who praised his backers in the House. "REPUBLICANS HAVE TRIED DOING THIS FOR 40 YEARS, AND FAILED... BUT NO MORE. THIS IS BIG!!!" he wrote on Truth Social. Most of the cuts target programs for countries hit by disease, war and natural disasters. But the move also scraps $1.1 billion that the Corporation for Public Broadcasting was due to receive over the next two years. Conservatives say the funding -- which goes mostly to more than 1,500 local public radio and TV stations, as well as to public broadcasters NPR and PBS -- is unnecessary and has funded biased coverage. The bill originally included $400 million in cuts to a global AIDS program that is credited with saving 26 million lives, but that funding was saved by a rebellion by moderate Republicans. - 'Dark day' - The vote was a win for Trump and fiscal hawks seeking to support the mission of the so-called Department of Government Efficiency (DOGE), launched by Musk as Trump was swept to power, for radical savings. Congress had already approved the cash that was clawed back, and Democrats framed the bill as a betrayal of the bipartisan government funding process. They fear Trump's victory clears the way for more "rescissions packages" canceling agreed spending. "Instead of protecting the health, safety and well-being of the American people, House Republicans have once again rubber stamped Donald Trump's extreme, reckless rescissions legislation," House Minority Leader Hakeem Jeffries said in a joint statement with fellow top Democrats. Republicans need some Democratic votes to keep the government funded past September, and the minority party had threatened to abandon any plans for cooperation if the DOGE cuts went ahead. Jeffries and fellow Democrats seemed to suggest as much on Friday. "Tonight's vote... makes it clear that House Republicans are determined to march this country toward a painful government shutdown later this year," they said in the statement. Although they are in the minority, Democrats have leverage in funding fights because a budget deal would need at least 60 votes in the 100-member Senate and Republicans only have 53 seats. Senate Minority Leader Chuck Schumer called it "a dark day for any American who relies on public broadcasting during floods, hurricanes, tornadoes, and other disasters." White House budget chief Russell Vought told an event hosted Thursday by the Christian Science Monitor that the administration was likely to send another rescissions package to Congress. ft-mlm/rsc
