Indonesia Offers Tariff Cuts to the U.S.

By Stefanno Sulaiman and Ananda Teresia
JAKARTA (Reuters) – Indonesia has proposed to reduce duties on key U.S. imports to “near zero” and to purchase $500 million worth of U.S. wheat as part of tariff negotiations, according to Chief Economics Minister Airlangga Hartarto and the wheat industry association on Friday.

Airlangga, Indonesia’s lead negotiator, also confirmed that state carrier Garuda Indonesia would acquire more Boeing planes in a $34 billion deal with U.S. partners set to be signed next week.

In 2024, Indonesia registered a goods trade surplus of $17.9 billion with the U.S., as reported by the U.S. Trade Representative. Currently, Indonesia faces a 32% tariff within U.S. markets and has proposed increasing U.S. imports to advance trade discussions.

Airlangga noted that Indonesia is willing to cut tariffs on essential American exports, like agricultural products, from 0% to 5% down to near-zero.
“It will be near zero (tariffs for U.S. main exports), but it will depend as well on how much the tariffs we get from the U.S.,” he remarked.

Garuda’s CEO mentioned discussions with Boeing regarding the purchase of up to 75 aircraft units. However, Garuda did not respond to requests for comments on Friday.

The proposed wheat purchases are included in the upcoming agreement with U.S. partners. Franciscus Welirang, chairman of Indonesia’s wheat flour mills association, stated that members would procure a total of two million tons via competitive tenders.
“The point is all of the members will buy U.S. wheat,” added Welirang, who also serves as a director at Indofood.

Partners involved in the U.S. wheat deal include Cargill, Bunge Global SA, Pacificor, Archer-Daniels-Midland, Columbia Grain International, and United Grain Corporation.

U.S. exports to Indonesia encompass soybeans, petroleum gases, and aircraft, according to Indonesian government data.

In response to questions about military agreements in the trade talks, Airlangga confirmed that they were “not part of the negotiation.”

Susiwijono Moegiarso, a senior official at Indonesia’s Coordinating Ministry for Economic Affairs, indicated Jakarta’s desire for the U.S. to lower tariffs on its main exports, such as electronics, textiles, and footwear.
“We want them to lower the tariffs (for those goods) as low as possible,” he stated.

Furthermore, Indonesia has extended opportunities for U.S. investment in critical mineral projects, leveraging its substantial resources of copper, nickel, and bauxite.