Trump sets 19% tariff on Indonesia goods in latest deal, EU readies retaliation

WASHINGTON/BRUSSELS — President Donald Trump on Tuesday (July 15) said the US would impose a 19 per cent tariff on goods from Indonesia under a new agreement with the Southeast Asian country and more deals were in the works as he continued to press for what he views as better terms with trading partners and ways to shrink a huge US trade deficit.

The pact with the relatively minor US trading partner is among the handful struck so far by the Trump administration ahead of an August 1 deadline for tariffs on most US imports to rise again. The accord came as the top US trading partner — the European Union — readied retaliatory measures should talks with Washington fail.

As that deadline approached, negotiations were under way with other nations eager to avoid more US levies beyond a baseline 10 per cent on most goods that has been in place since April.

Trump's roll-out of the policies has often been chaotic. His moves have upended decades of negotiated reductions in global trade barriers and roiled international financial markets and economic activity along the way.

Based on Trump tariff announcements through Sunday, Yale Budget Lab estimated the US effective average tariff rates will rise to 20.6 per cent from between two per cent and three per cent before Trump's return to the White House in January. Consumption shifts would bring the rate down to 19.7 per cent, but it's still the highest since 1933.

Trump outlined an Indonesia deal similar to a pact struck recently with Vietnam, with a flat tariff on exports to the US roughly double the current 10 per cent and no levies on US exports going there. It also included a penalty rate for so-called transhipments of goods from China via Indonesia and a commitment to buy some US goods.

"They are going to pay 19 per cent and we are going to pay nothing... we will have full access into Indonesia, and we have a couple of those deals that are going to be announced," Trump said outside the Oval Office. Trump later announced on his Truth Social platform that Indonesia had agreed to buy US$15 billion (S$19 billion) of US energy products, US$4.5 billion of American farm products and 50 Boeing jets, though no time frame was specified.

Trump: India talks moving same way

Indonesia's total trade with the US — totalling just under US$40 billion in 2024 — does not rank in the top 15, but it has been growing. US exports to Indonesia rose 3.7 per cent last year, while imports from there were up 4.8 per cent, leaving the US with a goods trade deficit of nearly US$18 billion.

The top US import categories from Indonesia, according to US Census Bureau data from the International Trade Centre's TradeMap tool, last year were palm oil, electronics equipment including data routers and switches, footwear, car tires, natural rubber and frozen shrimp.

Susiwijono Moegiarso, a senior official with Indonesia's Coordinating Ministry for Economic Affairs, told Reuters in a text message: "We are preparing a joint statement between US and Indonesia that will explain the size of reciprocal tariff for Indonesia including the tariff deal, non-tariff and commercial arrangements. We will inform (the public) soon."

Trump had threatened the country with a 32 per cent tariff rate starting Aug 1 in a letter sent to its president last week. He sent similar letters to about two dozen trading partners this month, including Canada, Japan and Brazil, laying out tariff rates ranging from 20 per cent to 50 per cent, plus a 50 per cent tariff on copper.

Speaking in Pittsburgh on Tuesday, Trump said he favoured blanket tariffs over complicated negotiations, but his Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick were keen to land more trade agreements.

Upon his arrival back in Washington, Trump told reporters that letters would be going out soon for many smaller countries, suggesting they would face a tariff of "a little over 10 per cent."

The August 1 deadline gives targeted countries time to negotiate about lower tariff rates. Some economists have also noted Trump's pattern of backing off his tariff threats.

Since launching his tariff policy, Trump has clinched only a few deals, falling short of earlier promises to land "90 deals in 90 days."

So far, framework agreements have been reached with the United Kingdom and Vietnam, and an interim deal has been struck with China to forestall the steepest of Trump's tariffs while negotiations continue between Washington and Beijing.

Trump said talks with India were moving "along that same line," adding, "We're going to have access to India. And you have to understand, we had no access into any of these countries. Our people couldn't go in. And now we're getting access because of what we're doing with the tariffs."

EU readies retaliation

The breakthrough with Indonesia came as the European Commission, which oversees trade for the EU, prepared to target 72 billion euros (S$107.33 billion) worth of US goods — from Boeing aircraft and bourbon whiskey to cars — for possible tariffs if trade talks with Washington fail.

Trump is threatening a 30 per cent tariff on imports from the EU from August 1, a level European officials say is unacceptable and would end normal trade between two of the world's largest markets.

The list, sent to EU member states and seen by Reuters on Tuesday, pre-dated Trump's move over the weekend to ramp up pressure on the 27-nation bloc and responded instead to US duties on cars and car parts and a 10 per cent baseline tariff.

The package also covers chemicals, medical devices, electrical and precision equipment as well as agriculture and food products — a range of fruits and vegetables, along with wine, beer and spirits — valued at 6.35 billion euros.

Source: Reuters