MercoPress. South Atlantic News Agency

Trump announces historic trade deal with Indonesia

The Asian country is rich in copper, which could affect Chile's future exports

US President Donald Trump on Tuesday announced a “historic” trade agreement with Indonesia, personally negotiated with President Prabowo Subianto, that significantly alters trade terms between the two nations.

Under the new understanding, Indonesia's tariffs on US imports will be eliminated, while US tariffs on Indonesian goods will be reduced from an initial threat of 32% down to 19%. Trump emphasized that this deal grants the United States “full access” to the Indonesian market, particularly highlighting Indonesia's abundant copper resources, which have Chilean producers watching these developments closely. It also provides full access for American ranchers, farmers, and fishermen to Indonesia's market of over 280 million people.

As part of the agreement, Indonesia has committed to substantial purchases from the US, including US$15 billion in energy, US$4.5 billion in agricultural products, and 50 Boeing aircraft, estimated to be worth around US$20 billion. The total value of Indonesian purchases is projected to be approximately US$40 billion.

This agreement comes after months of trade tension, where Trump had threatened a 32% tariff on Indonesian imports. The deal also holds significance as Indonesia has been strengthening its ties with the BRICS bloc, a group that Trump views with suspicion and has threatened with additional tariffs.

The agreement includes an anti-trade diversion clause, ensuring that if Indonesia acts as an intermediary for countries with higher US tariffs, those tariffs will be applied to the transaction. This deal is the fourth reached by the Trump administration in recent months, following agreements with the United Kingdom, Vietnam, and a truce with China.

While Trump has announced the terms, Indonesia has not yet officially confirmed the details. Meanwhile, the European Union continues negotiations to avoid impending 30% tariffs from the US set to begin on August 1.