On July 22, President Donald Trump announced on social media that the U.S. and Indonesia have agreed to a framework deal setting the stage for an eventual, yet-to-be-finalized Agreement on Reciprocal Trade. The White House published a Joint Statement between the U.S. and Indonesia and Fact Sheet on its website shortly after. Highlights are as follows:

• The U.S. will reduce Indonesia’s reciprocal tariff rate from the previously threatened 32% to 19% and may subject specific Indonesian products “not naturally available or domestically produced” in the U.S. to a lower, unspecified reciprocal tariff rate.
• Please note the official documentation published so far does not explicitly state when the new 19% reciprocal tariff rate will take effect, but it is presumed that this rate would enter into force on August 1 and replace the currently applied 10% baseline tariff.
• The U.S. and Indonesia will continue negotiations over rules of origin provisions to restrict third-party countries from benefiting from the eventual U.S.-Indonesia Agreement on Reciprocal Trade.
• Indonesia will:
• Remove “approximately 99 percent” of tariff barriers for U.S. products and resolve a host of non-tariff issues affecting U.S. companies, including in agriculture and digital trade;
• Purchase billions of dollars’ worth of civil aircraft, agricultural, and energy products from American firms;
• Cooperate with the U.S. to boost economic and national security cooperation, including through “complementary actions to address unfair trade practices of other countries” and collaborative action on issues such as illegal duty evasion;
• Act to address global steel overcapacity, protect internationally recognized labor rights, and uphold environmental laws within Indonesia; and
• Remove all restrictions on exporting industrial commodities to the U.S., including critical minerals.

Finally, the two countries have agreed to continue to “negotiate and finalize the Agreement on Reciprocal Trade” – reiterating that today’s announcement is simply a preliminary deal on a framework to continue negotiations in pursuit of an Agreement on Reciprocal Trade between the U.S. and Indonesia. 

It is important to note that, unlike the President’s initial announcement about the deal with Indonesia on July 15, neither President Trump’s Truth Social post today nor the succeeding White House publications explicitly mention inclusion of a higher “transshipment” rate. Recent reporting from the Wall Street Journal nonetheless suggests that the White House still plans to target transshipped goods (products made with non-originating content) with a higher 40% duty, but no official communications have provided such details as of yet.

SSA is following these developments closely and will provide relevant information as necessary. In the meantime, please do not hesitate to reach out with any questions.