Indonesia offers boost in US purchases in exchange for lower tariffs

Indonesia is proposing to increase imports of American goods, including aircraft and wheat, as part of its negotiations with the United States to secure lower tariffs on its own exports, ccccccccccccccccccccccccccccccccccccccccccccccccccccccccAirlangga Hartarto told Reuters on July 4. Speaking as Indonesia’s lead negotiator in the ongoing talks, Airlangga said state-owned carrier Garuda Indonesia and food giant Indofood are prepared to ramp up purchases of US products, including aircraft from Boeing and American wheat, in an effort to secure more favourable trade terms.

Garuda Indonesia is reportedly in discussions to buy up to 75 Boeing aircraft, while Indofood, known for its instant noodles, could boost wheat imports. Both companies declined to comment on the ongoing negotiations.

Trade deal aims to narrow deficit, boost investment

The talks are part of a broader $34 billion pact expected to be finalised next week. The agreement is likely to include increased Indonesian purchases of American goods and new investments by Indonesian firms in the US. Airlangga said Indonesia is also offering the US near-zero tariffs on key exports, particularly agricultural products, which currently face duties of between 0 per cent and 5 per cent. However, he emphasised that Indonesia expects reciprocal reductions from Washington, where Indonesian goods still face tariffs as high as 32 per cent.

“We want to see the same commitment from the US side,” Airlangga told Reuters. “The final tariff reductions will depend on how much the US is willing to adjust.”

In return, Jakarta is seeking lower tariffs for Indonesian exports such as electronics, textiles, and footwear. Susiwijono Moegiarso, a senior official from the Coordinating Ministry for Economic Affairs, also told Reuters these sectors are crucial to Indonesia’s export economy and need better access to US markets.

Mineral investment opportunities on the table

Indonesia has also extended an offer to the US to invest in its critical minerals sector, including copper, nickel, and bauxite, key inputs in electric vehicle and battery manufacturing. Airlangga confirmed that military cooperation is not part of the negotiations.

In 2024, the US goods trade deficit with Indonesia stood at $17.9 billion. Top American exports to Indonesia include soybeans, petroleum gases, and aircraft, according to trade data.