Indonesia-US Trade Negotiations: Tariff Reductions on Textiles and Footwear

Ongoing Discussions for Preferential Tariffs

Indonesia is currently engaged in negotiations with the United States to secure lower tariffs on specific export commodities, particularly textiles and footwear. According to Edi Prio Pambudi, Deputy for Economic Cooperation and Investment at the Coordinating Ministry for Economic Affairs, the Indonesian government is pushing for reduced tariffs from the existing 19% rate established in previous agreements ¹

Strategic Tariff Reductions

The negotiations are focused on achieving significant tariff reductions for Indonesian products that are in demand in the US market but face supply constraints. Edi explained that Indonesia is seeking 0% tariffs for commodities that the US cannot produce domestically, primarily focusing on plantation and critical mineral products. For products that the US can produce but faces short-term supply constraints, Indonesia is negotiating for tariffs below 19% ¹

Key Export Products in Focus

The Indonesian government is particularly keen on reducing tariffs for textile and footwear products. Edi highlighted that these industries, known for their 'made in Indonesia' label, are potential candidates for tariff reductions. The rationale is that while the US has the capability to produce these goods, it cannot meet its demand in the short term, making Indonesian exports valuable ¹

Challenges in Trade Agreements

The negotiations come as Indonesian businesses, such as tire manufacturers, have expressed difficulties in exporting to countries with which Indonesia has existing trade agreements, like Thailand and India. Minister of Trade Budi Santoso responded to these concerns by emphasizing that trade agreements are designed to facilitate easier access to foreign markets and are negotiated with careful consideration of national interests and industry inputs ²