On July 22, 2025, the United States and Indonesia announced a framework to negotiate an Agreement on Reciprocal Trade aimed at enhancing their bilateral economic relationship. This agreement will eliminate approximately 99 percent of tariff barriers on a wide range of U.S. products exported to Indonesia, while the U.S. will lower its tariffs on Indonesian goods to 19 percent. The framework also includes commitments to address non-tariff barriers, facilitate digital trade, and strengthen labor and environmental protections, reflecting a comprehensive approach to mutual economic benefit.

The agreement builds on the existing U.S.-Indonesia Trade and Investment Framework Agreement established in 1996 and outlines specific commitments from both nations. Indonesia has pledged to remove various restrictions affecting U.S. exports, enhance protections for labor rights, and adopt high environmental standards. Additionally, both countries aim to collaborate on supply chain resilience and address unfair trade practices from other nations, thereby reinforcing their economic and national security cooperation.

As part of this initiative, the United States and Indonesia expect to finalize the Agreement on Reciprocal Trade in the coming weeks, preparing it for signature and implementation. This agreement is anticipated to lead to significant commercial deals, including the procurement of aircraft and purchases of agricultural and energy products, collectively valued at over $22 billion. The expected outcomes of this framework illustrate a commitment to fostering stronger trade ties while addressing key regulatory and economic challenges.

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