US-Indonesia Trade Deal Finalized, Lowering Tariffs and Boosting Economic Ties

Washington, D.C. – President Donald J. Trump and Indonesian President Prabowo Subianto finalized a landmark trade agreement on Thursday, February 19, 2026, aimed at bolstering economic cooperation between the two nations. The deal, which follows months of negotiations, is expected to lower US tariffs on Indonesian goods and facilitate an estimated $33 billion in American exports to Indonesia.

Key Terms of the Agreement

The U.S.-Indonesia Agreement on Reciprocal Trade includes several key provisions designed to enhance trade and investment:

• Tariff Elimination: Indonesia will eliminate tariff barriers on over 99% of U.S. Products exported to Indonesia, spanning sectors like agriculture, health products, seafood, information and communications technology, automotive products, and chemicals.
• Non-Tariff Barrier Reduction: Indonesia will address non-tariff barriers, including exempting U.S. Companies from local content requirements, accepting U.S. Federal motor vehicle safety and emission standards, and adopting FDA standards for medical devices and pharmaceuticals.
• Agricultural Trade: Indonesia will address barriers to U.S. Agricultural products by exempting food and agricultural products from import licensing regimes and ensuring transparency in geographical indications for products like meats and cheeses.
• Digital Trade: Indonesia has committed to eliminating tariffs on “intangible products” and supporting a permanent moratorium on customs duties on electronic transmissions at the World Trade Organization.
• Tariff Rate: Indonesia will face a 19% tariff rate for most goods, avoiding a previously threatened 32% tariff.

Impact on Trade

The agreement is anticipated to significantly impact trade flows between the US and Indonesia. Indonesia, a Group of 20 nation and the US’s second-largest export destination, will benefit from the elimination of heightened duties on exports such as palm oil, spices, and pharmaceuticals. The deal also includes provisions for tariff exemptions on certain textiles and apparel, supporting a key Indonesian industry.

For the United States, the agreement aims to expand access to Indonesia’s growing consumer market of over 280 million people and encourage Indonesian companies to source more goods from the US. Indonesia is expected to increase purchases of US energy, agricultural products, and other goods, potentially narrowing Indonesia’s current $16 billion trade surplus with the US. Specific commitments include the import of $15 billion in US energy, including $3.5 billion of liquefied petroleum gas, $4.5 billion of crude oil, and $7 billion of refined gasoline.

Commitment to Implementation

Both President Trump and President Subianto have expressed strong commitment to implementing the agreement. They signed a document confirming their dedication to the deal and instructed their teams to take further steps to strengthen the U.S.-Indonesian alliance. The White House stated the agreement will usher in a “NEW GOLDEN AGE” of the U.S.-Indonesian Alliance.