What the New U.S. – Indonesia Tariff Agreement Means for Global Sourcing

The trade relationship between Indonesia and the United States has seen a significant shift this July with the announcement of a new tariff agreement. After weeks of negotiations, both countries have agreed to a revised 19% tariff on Indonesian exports to the U.S.—a much-needed compromise compared to the 32% rate initially proposed.
Here’s what this deal means for importers, exporters, and global sourcing professionals. A 19% Tariff Deal—Better Than Expected
On July 15, President Trump confirmed that the U.S. and Indonesia had finalized a deal to impose a 19% tariff on Indonesian goods, effective as early as August 1. While still a steep rate, this agreement avoids the harsher 32% tariff that was originally on the table. The announcement came after Indonesia agreed to several reciprocal trade measures and large-scale purchases from the U.S.

What Indonesia Gave in Return

To secure the 19% rate, Indonesia committed to purchasing:

• 50 Boeing aircraft
• $15 billion in U.S. energy products
• $4.5 billion in American agricultural goods

In addition to these purchases, Indonesia is easing restrictions on U.S. imports and dropping tariffs across several categories, creating more favorable access for American exporters.

Still Under Discussion: Exemptions and Key Sectors

While the agreement covers most products, Indonesia is still in talks with the U.S. Trade Representative to negotiate carve-outs for specific commodities. These include:

• Palm oil
• Nickel
• Rubber
• Cocoa
• Coffee

Details on exemptions or reduced rates for these products are expected in the coming weeks. In parallel, Indonesia is taking steps to tighten customs procedures to prevent transshipment—where goods are routed through third countries to dodge tariffs. This has been a major concern for U.S. regulators.

Industry Reactions: Diversification and Strategy Shifts

The Indonesian seafood industry is already adjusting. With the 19% tariff coming into effect soon, exporters are exploring new markets and evaluating long-term supply strategies. Other industries are expected to follow suit.
U.S. importers, on the other hand, may face price increases on common goods like home appliances, textiles, and packaging materials once current inventory runs low. Many are weighing whether to pass these costs on to consumers or shift sourcing to other markets within Southeast Asia.

Major Global Brands Already Manufacturing in Indonesia

Despite the current tariff developments, Indonesia continues to be a preferred destination for manufacturing thanks to its skilled workforce, lower labor costs, and improving infrastructure.

Several well-known global brands already operate manufacturing facilities in Indonesia, including:

• Nike – One of the largest employers in Indonesia’s footwear sector, producing millions of pairs of shoes annually.
• Adidas – Operates several contract manufacturing facilities through local partners.
• Unilever – Has extensive operations in food, personal care, and household products across Indonesia.
• Samsung – Manufactures electronics and mobile phones locally for the Indonesian and regional market.
• Panasonic – Produces home appliances and electronics, especially for Southeast Asia.
• Toyota – Has long-term investments in automotive manufacturing in Indonesia, both for domestic and export markets.
• Foxconn – Announced new investments in Indonesia as part of diversification outside of China.
• L’Oréal – Runs a modern manufacturing facility near Jakarta, supplying cosmetics and personal care products across Asia.

These companies have strategically chosen Indonesia not just for cost reasons, but also for its growing domestic market and regional trade agreements.

Global Context: Indonesia Comes Out Ahead in ASEAN

Indonesia’s 19% rate is actually one of the most favorable outcomes in Southeast Asia. Under the U.S.’s new reciprocal tariff policy—set to roll out on August 1—countries like Vietnam, the Philippines, and Thailand are facing rates between 20% and 30%. Others, including Canada, Japan, and South Korea, are still negotiating or preparing for tariffs as high as 50%.

This makes Indonesia a relatively competitive sourcing destination in the region, despite the added costs.

What Businesses Should Watch For

As the implementation date approaches, sourcing managers and supply chain professionals should be asking:

• Will suppliers in Indonesia absorb some of the 19% tariff cost or pass it fully to buyers?
• Are any of your key product categories up for exemption?
• What documentation will be required for customs clearance under the new rules?
• Should you consider diversifying sourcing within ASEAN or renegotiating contracts?

Final Thoughts

This new trade deal reshapes how U.S. companies approach sourcing from Indonesia. While a 19% tariff adds cost and complexity, it also brings clarity—and compared to other countries, Indonesia remains well-positioned in the region.
For businesses that move quickly to adapt, there are still opportunities to maintain cost-effective supply chains and long-term supplier relationships.