Last week, the White House released a fact sheet on the recent trade deal between the United States and Indonesia. President Trump praised the agreement, saying it gives American businesses access to the Indonesian market. The US-Indonesia Agreement on Reciprocal Trade is expected to bring benefits to the US industries like manufacturing, farming, and digital services.
One of the key terms of the agreement is the removal of tariffs on over 99% of American products exported to Indonesia. This includes goods from every sector including agricultural products, healthcare goods, seafood, information and communication technologies, automotive products, and chemicals. The removal of these tariffs will enable the US goods to enter the Indonesian market more competitively.
Equally important is the agreement’s comprehensive approach to non-tariff barriers, which have historically hindered the US access to the Indonesian market. Indonesia will implement several key reforms, including the exemption of the US companies from local content requirements and the recognition of the US safety and emissions standards for vehicles.
Additionally, Indonesia will accept the US Food and Drug Administration (FDA) approvals for pharmaceuticals and medical devices, and remove burdensome labeling and certification requirements on products such as cosmetics and other manufactured goods. Further, the agreement ensures that the US remanufactured goods and parts will be exempt from restrictive import rules and pre-shipment inspections.
For US agriculture, the agreement introduces equally significant measures. Indonesia will exempt American agricultural and food products from all import licensing regimes, including its commodity balance policy. The agreement also ensures fair and transparent treatment of geographical indications (GIs), particularly those affecting the US meat and dairy exports.
Furthermore, Indonesia will grant permanent “Fresh Food of Plant Origin” (FFPO) status for eligible US plant products and recognize the US regulatory authorities and certifications for all meat, poultry, and dairy facilities. To ensure the benefits of the agreement are reserved for both parties, the United States and Indonesia will negotiate rules of origin that prevent third-country goods from gaining preferential treatment under the deal.
The agreement also addresses digital trade, services, and investment. Indonesia has pledged to eliminate tariff lines on intangible digital products, such as software and e-books, and suspend related import declaration requirements. This commitment aims to reduce trade friction in the rapidly growing digital economy.
As part of the deal, Indonesia will join the Global Forum on Steel Excess Capacity and take concrete steps to combat global overproduction of steel, a major concern for fair competition in the industry. In addition, both nations have agreed to deepen cooperation on supply chain resilience, with the goal of building more secure and stable trade flows.
On the issue of labor rights, Indonesia has committed to enacting a ban on the importation of goods produced with forced labor. The country will also remove legal provisions that restrict workers and unions from exercising their rights to freedom of association and collective bargaining. These measures are intended to promote ethical labor practices and align with internationally recognized labor standards.
The agreement also recognizes a number of new commercial deals in sectors such as aerospace, and energy, which are projected to increase the US export volumes to Indonesia. In the coming weeks, both nations will formally sign and finalize the trade agreement. According to the White House, this deal demonstrates that the United States can protect its industries, support its workforce, and strengthen its national security while still gaining major economic access to international markets.
As the US products gain easier entry into the Indonesian market, local companies will likely face stronger competition. This will be especially noticeable in sectors such as agriculture, health products, and industrial goods, where the US brands often have technological or quality advantages. Small and medium-sized enterprises (SMEs) in Indonesia may find themselves under pressure to innovate, improve efficiency, or differentiate their products to survive.
However, the deal also offers a long-term opportunity for Indonesia to modernize industries, and integrate more deeply into global supply chains. Beyond tariffs, the deal opens doors for Indonesian suppliers to scale up, diversify, and attract foreign capital. One of the most transformative aspects of the agreement lies in regulatory reform. The changes reduce friction for foreign investors and create new pathways for Indonesian firms to access global partners and customers.
In short, this deal offers a path toward industrial modernization, export expansion, and a more prominent role in the global economy. The challenge now will be to turn these commitments into action and ensure that the benefits are broadly shared across the Indonesian business landscape.
