Indonesia’s president, Prabowo Subianto, confirmed on Wednesday the broad outlines of a trade agreement with the United States that was reached after what he called “tough negotiations” with Washington.
Under the terms, which President Trump on Tuesday called a “great deal for everybody,” U.S. exports to Indonesia would face no tariffs, while Indonesian goods would be charged a tariff of 19 percent in the United States.
Mr. Prabowo confirmed in brief remarks in Jakarta that the two nations had “finally” reached an agreement. “We understand their interests, and they understand ours,” he added.
The announcement comes as the Trump administration is trying to close trade deals with numerous countries, and threatening to impose double-digit tariffs on the exports of two dozen nations as of Aug. 1 if agreements aren’t reached.
U.S. and Indonesian officials have been engaged in trade talks for several months. Last week, Mr. Trump threatened Indonesia with a 32 percent tariff on its exports in a letter posted to his social media account, as he sent similar form letters to dozens of countries. Indonesian officials said they were surprised to receive the letter, given that talks had been going well.
“I think it’s a good deal for both parties,” Mr. Trump said, while saying that a forthcoming deal with India would also follow similar lines. He added that Indonesia also had minerals and “very high-quality copper, which we’ll be using.”
Indonesia also agreed to buy Boeing jets, according to Mr. Prabowo. Other details were not made public.
Mr. Prabowo called Mr. Trump “quite a tough negotiator” and suggested that the country had hoped for lower tariffs, and would keep negotiating.
“I’m very optimistic that our economy is in strong and good condition,” Mr. Prabowo said. “So whatever happens, we will be strong.”
Airlangga Hartoto, the Indonesian minister for economic affairs, said in an interview in Washington last week following meetings with U.S. officials that Mr. Trump’s high tariffs threatened 300,000 jobs in Indonesia, including in industries like apparel and shoes.
He said that the United States and Indonesia were natural partners and that, while he was surprised to receive Mr. Trump’s letter with the tariff threats, he felt confident about reaching a deal. He added, however, that Indonesia was also pursuing other trading relationships, like a trade pact with Europe that would lower tariffs for many goods on both sides to zero.
The agreement with Indonesia is the third Mr. Trump has announced in recent months, following limited deals with Britain and Vietnam.
On each occasion, the president announced that a trade agreement had been reached on his social media account, but the White House did not immediately release information about what the deal entailed.
The pattern has placated stock market investors worried about continued tariffs and disruption, but raised serious questions about what benefit these deals will have to U.S. businesses and how concrete their terms are. The terms of the Vietnam deal, which Mr. Trump announced Jul. 2, have never been announced and still appear to be in dispute.
The initial agreement with Indonesia announced by Mr. Trump on Tuesday follows a pattern in his negotiations with various countries in the region that is focused on both containing China and squeezing it out of supply chains.
Similar to Mr. Trump’s preliminary agreement with Vietnam, the deal with Indonesia includes a clause with additional tariffs on “transshipment,” basically any goods that are being rerouted through Indonesia from a country with a higher tariff rate.
This is aimed at tackling concerns that countries in Southeast Asia have become channels for Chinese factories to circumvent tariffs and get their products into the United States. Recent monthly trade data shows that exports from China to the region have soared, raising speculation in Washington that some of these Chinese goods are then being shipped on to the United States.
But economists said that while Chinese exports to Indonesia have steadily risen, it has not been a primary destination for Chinese companies to rechannel goods ultimately destined for the United States.
This is in part because its distance from China, its landscape — made up of 17,000 islands spanning a distance of Britain to Iran, and the fact that its manufacturing base is not as sophisticated as countries like Vietnam, which shares a land border with China.
Mr. Trump’s aim of containing China’s influence in global trade has become a headache for many countries in Southeast Asia, like Indonesia, that count China as their biggest trade partner. After Mr. Trump posted details about his deal with Vietnam, China issued a warning that it would take countermeasures against any deal that came “at the expense of China’s interest.”
“If you’re an ASEAN country, you’re finding it difficult to strike a deal with the Trump administration,” said Euben Paracuelles, Southeast Asian economist for Nomura, referring to the Association of Southeast Asian Nations, a trading organization of ten countries in the region. “And then you have China knocking on your door.”
Hasya Nindita contributed reporting.
Ana Swanson covers trade and international economics for The Times and is based in Washington. She has been a journalist for more than a decade.
Alexandra Stevenson is the Shanghai bureau chief for The Times, reporting on China’s economy and society.
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