Tariff Rate Lowered from Prior Official Notice of 32%
Third Trade Agreement After the United Kingdom and Vietnam
On July 15 (local time), U.S. President Donald Trump announced that a trade agreement had been reached with Indonesia. Indonesia is the second Asian country, after Vietnam, to sign a new agreement with the United States following President Trump's announcement of a reciprocal tariff policy.
President Trump stated in two posts on his self-created social network, Truth Social, as well as in remarks at the White House, "Today, after a call with Indonesia's respected President Prabowo Subianto, we finalized an important (trade) agreement with Indonesia." With this, the total number of countries that have signed new trade agreements with the United States has increased to three, including the United Kingdom, Vietnam, and Indonesia in Asia.
He also explained, "Indonesia will pay a 19% tariff on all goods exported to the United States, while goods exported from the United States to Indonesia will be exempt from both tariff and non-tariff barriers."
This means that Indonesian products entering the United States will be subject to a 19% tariff, but U.S. products exported to Indonesia will not be subject to tariffs. In the tariff letter released on July 7, the tariff rate imposed on Indonesia was 32%. The new rate is lower than before.
President Trump stated, "If goods are transshipped through Indonesia to the United States from a country with a higher tariff, the applicable tariff will be added to the tariff Indonesia pays."
President Trump emphasized that with this agreement, all non-tariff barriers in every sector have been completely lifted, making it possible for U.S. companies to enter the Indonesian market in all areas.
President Trump said, "This groundbreaking agreement means that Indonesia's entire market is being opened to the United States for the first time in history," and added, "Our ranchers, farmers, and fishermen now have full and comprehensive access to Indonesia's market of 280 million people for the first time."
He further stated, "As you know, Indonesia is very strong in the copper sector. However, we have secured complete access in all sectors."
However, President Trump did not specify whether the tariff rate on Indonesian copper would be set at 50% or 19%.
In addition, President Trump said that through this agreement, Indonesia has pledged to purchase $15 billion (about 20.8 trillion won) worth of U.S. energy, $4.5 billion (about 6.25 trillion won) worth of U.S. agricultural products, and 50 Boeing aircraft, most of which are 777 models.
President Trump also hinted at the possibility of signing additional trade agreements. He said, "Several agreements like this (with Indonesia) will be announced," and added, "We are basically moving in the same direction with India, and we will have full access to India."
Regarding the effects of his tariff policy, President Trump said, "There are two aspects: first is the money, and second is that instead of paying tariffs, companies build production facilities and make products in the United States. This creates jobs," adding, "The latter is more important."
Regarding trade negotiations with the European Union (EU), which was recently subjected to a 30% tariff in his letter, President Trump said, "We are talking and making progress," adding, "But we have already made an agreement with the EU. That is what is called the 'letter' that was sent."
When asked if he had a message in case the EU chooses retaliatory tariffs, President Trump replied, "I don't know how they will retaliate. They have made a lot of money. They treated us badly, but now they are being very kind. I think everyone will be satisfied with the EU."
According to Politico Europe, Euractiv, and others, the European Commission, the executive branch of the EU, recently shared a 206-page document with its 27 member states listing items subject to a second round of retaliatory measures. These measures are in response to the U.S. base tariff of 10% and 25% on automobiles.
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