Trump says US will pay no tariffs to Indonesia as part of trade deal

Agreement is third reached by White House since announcement of 'reciprocal' levies

President Donald Trump has framed his tariff policy as a means to reduce deficits the US has with its trading partners. Bloomberg

President Donald Trump on Tuesday said the US will not pay tariffs to Indonesia as part of a trade deal negotiated with the South-East Asian country.

The announcement follows a letter Mr Trump sent to Indonesia last week, in which he threatened to impose a 32 per cent charge on Indonesian goods. In the letter, he said the tariff would be implemented by August 1 unless a deal was reached.

“We will pay no tariffs, so they are giving us access into Indonesia which we've never had. That's probably the biggest part of the deal. And the other part is, they are going to pay 19 per cent and we are going to pay nothing,” Mr Trump told reporters at the White House.

Mr Trump also said Indonesia would purchase 50 Boeing jets, as well as $4.5 billion in agricultural products and $15 billion in US energy as part of the deal.

Mr Trump has framed his so-called reciprocal tariff policy as a means to reduce deficits the US has with its trading partners. According to the Office of the US Trade Representative, the US had a goods trade deficit of $17.9 billion with Indonesia last year, a 5.4 per cent increase from 2023.

US exports to Indonesia increased 3.7 per cent to $10.2 billion last year, while imports rose 4.8 per cent.

The letters represented the latest chapter in Mr Trump's efforts to reformat US trade since resuming office earlier this year. In April, he announced a blanket 10 per cent tariff on almost all trading partners while imposing harsher tariffs on other countries with which the US has a trade deficit.

He reversed course a week later following a bond market rout, instituting a 90-day deadline that expired last week. The White House announced few deals within that time – with the UK and Vietnam – while also securing a “trade truce” with China, which has a separate deadline.

Among the countries hit with trade letters last week were Canada, Japan, Iraq and more than a dozen others, with tariff rates ranging from 20 to 50 per cent.