Indonesia aims for a bold U.S. trade deal with near-zero tariffs on 1,700+ items (nearly 70% of US imports) spanning critical minerals, energy, defence cooperation, and market access.

Indonesia is edging toward a landmark trade agreement with the United States that would cover critical minerals, energy, defence cooperation, and broader market access, according to Indonesia’s top trade negotiator. The government is signaling confidence that a bold deal is within reach ahead of an impending tariff deadline, signaling a potential shift in trade dynamics between Southeast Asia’s largest economy and its second-largest export destination after China.

Near-zero tariffs on a vast range of goods

Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, disclosed in a statement to Bloomberg News that the government aims to secure near-zero tariffs on more than 1,700 commodities, accounting for nearly 70% of U.S. imports. This expansive tariff relief would encompass key sectors that the United States has prioritized, including electronics, machinery, chemicals, healthcare, steel, agriculture, and automotive products. The magnitude of the proposed tariff liberalization underscores the ambition to create a more favorable environment for Indonesian exporters while aligning with U.S. interests in securing reliable supply chains and diversified sourcing.

The proposed framework, if confirmed, signals a significant step toward removing tariff barriers across a broad swath of goods. The inclusion of electronics, machinery, and chemicals reflects the United States’ emphasis on industrial modernization and technology transfer, while healthcare, steel, agriculture, and automotive sectors highlight continued collaboration in essential supply chains and consumer markets. By targeting such a wide array of commodities, the deal would aim to elevate Indonesia’s competitiveness on a global stage and offer U.S. buyers a broader, more predictable access to Indonesian-origin products.

Hartarto’s remarks suggest a strategic balance: while the offer promises substantial tariff relief for U.S. imports, it also positions Indonesia to deepen its economic partnership with Washington in ways that could bolster domestic industries, job growth, and technology transfer. The approach reflects Indonesia’s broader goal of strengthening its role as a reliable partner in the region’s evolving economic architecture, particularly as global supply chains recalibrate in response to shifting geopolitical and market forces.

Tariff timing, market signals, and comparative context

The looming tariff deadline has added a sense of urgency to the negotiations. Hartarto noted that the government remains in a “wait-and-see” stance pending a final decision from Washington before higher tariffs take effect on the scheduled date. This cautious posture reflects the delicate balance governments seek between securing favorable trade terms and avoiding abrupt market disruptions that could ripple through export sectors and financial markets.

In reaction to the news, the Indonesian currency and equity markets displayed subdued movements. The rupiah held steady around 16,180 per U.S. dollar, suggesting that investors were digesting the potential implications of a broader trade accord without triggering outsized volatility. On the stock side, early-trade losses moderated, with an overall slight dip of about 0.2%, signaling that investors were weighing the possible benefits of tariff relief against broader risk considerations shaping the regional economy.

Analysts highlighted that the ultimate impact hinges on the structure and scope of the final tariff schedule. Jeffrey Zhang, an emerging market strategist at Credit Agricole in Hong Kong, emphasized that the market will assess the full picture, including how final U.S. tariffs would be applied to different economies and the resultant changes in export competitiveness. This line of thinking underscores the necessity of a transparent, well-communicated framework that allows businesses to model scenarios and adjust supply chains accordingly.

The broader context includes a comparison to existing tariff levels in neighboring economies. The potential U.S. tariff regime for Indonesia is being weighed against a benchmark previously established by Vietnam, which secured a tariff level of 20% in a recent arrangement. The prospect of approaching a near-zero tariff regime would represent a meaningful departure from these benchmarks and could influence the competitive positioning of Indonesian products in U.S. markets relative to those from other exporters.

Critical minerals, supply chains, and strategic measures

A centerpiece of the negotiation focuses on critical minerals, with Hartarto detailing several measures designed to strengthen U.S. confidence in sourcing from Indonesia. These measures include preferential access for U.S. buyers, enhanced scrutiny of foreign ownership within the supply chain, and joint initiatives intended to ensure secure and transparent sourcing for key U.S. industries. Such provisions aim to reduce supply-chain risk and create a more predictable framework for U.S. firms seeking reliable access to Indonesian materials, particularly in sectors reliant on high-purity materials and stable supply lines.

These policy directions have a broader strategic significance beyond tariff considerations. Indonesia hosts the world’s largest reserves of nickel, a critical component in modern battery technology and energy storage solutions. By prioritizing secure and transparent sourcing, the government hopes to reassure U.S. partners about the integrity and reliability of Indonesian nickel and related materials, while also addressing concerns about ownership, traceability, and governance within the mining and processing sectors.

The anticipated prioritization of secure supply chains dovetails with Indonesia’s broader aim of enabling greater collaboration with the United States on technology-driven industries. In practice, this could involve governance enhancements, clearer ownership rules, and joint oversight mechanisms designed to promote transparency and minimize exposure to geopolitical or commercial risk. The net effect would be to create a more trusted environment for U.S. buyers and manufacturers to source strategic minerals from Indonesia, potentially reducing dependence on alternative suppliers and reinforcing Indonesia’s position in global value chains.

Another angle of the minerals discourse concerns competition with China-backed metal producers operating in Indonesia. By emphasizing secure, transparent sourcing and preferential access for U.S. buyers, the government signals a move to diversify away from reliance on any single supplier base, while safeguarding national interests and the integrity of the supply chain. This stance aligns with broader regional trends toward resilience and diversification in critical material supply networks, particularly for technologies dependent on nickel and related alloys.

Energy, imports, and defense cooperation in focus

The negotiation narrative also encompasses broader energy and agricultural dimensions. Indonesia plans to ramp up imports of U.S. gas and agricultural goods, a move designed to bolster the nation’s food and energy security. Diversifying energy imports and stabilizing food supply chains are central to national resilience strategies, particularly in a global landscape characterized by price volatility and shifting energy markets.

In parallel, state-owned airline Garuda Indonesia is pursuing commercial cooperation with U.S. entities that could include new aircraft purchases and expanded maintenance services. Such collaboration would not only support Indonesia’s transportation infrastructure but also deepen industrial linkages within the broader U.S.-Indonesia economic relationship. The potential for increased aircraft procurement and service partnerships would contribute to capacity-building in Indonesia’s aviation sector while reinforcing strategic ties with U.S. manufacturers and service providers.

On the defense front, the government aims to expand its procurement of U.S. military equipment, reinforcing Indonesia’s role as a dependable defense partner within the Indo-Pacific region. Strengthened defense collaboration would complement economic ties by creating interoperability advantages, facilitating know-how transfer, and expanding the scale and sophistication of Indonesia’s defense-industrial base. The emphasis on defense cooperation reflects a recognition of security as an essential pillar of a stable, mutually beneficial strategic relationship with the United States.

Policy reforms to support U.S. firms and intellectual property protections

Indonesia’s approach to U.S. firms includes commitments to more equitable treatment within the domestic economy. The plan involves relaxing local content requirements, which would ease requirements on certain manufacturing inputs sourced domestically. This move is intended to reduce friction for U.S. companies operating in Indonesia, enabling more seamless integration into local supply chains while still supporting domestic industrial development in a manner aligned with national interests.

Intellectual property protection is another critical area of emphasis. Strengthening IP protections aims to reassure U.S. partners that their innovations will be safeguarded within Indonesia’s legal and regulatory framework. Alongside this, Indonesia intends to open its national payment gateway to U.S. providers, a measure positioned to facilitate cross-border transactions and improve the efficiency of financial flows between the two economies. These actions respond to recurring concerns raised by the U.S. Trade Representative in its annual assessments and are framed as components of a broader strategy to create a fairer, more predictable environment for U.S. firms operating in Indonesia.

The overarching narrative conveyed by Hartarto centers on a balanced, forward-looking economic relationship that benefits businesses and workers on both sides of the Pacific. By emphasizing fairness, protection for intellectual property, and smoother payment systems, the government seeks to cultivate a climate in which American and Indonesian enterprises can collaborate more effectively, invest more confidently, and contribute to sustained economic growth.

Strategic messaging, outlook, and public signals

The communication from Indonesia’s negotiating leadership underscores a deliberate attempt to project confidence about the deal’s potential to unlock tangible advantages for both economies. The emphasis on a broad-based tariff liberalization, coupled with targeted protections and governance improvements, signals a pragmatic approach aimed at balancing openness with safeguards. The messaging reflects a desire to secure assurances that can withstand domestic scrutiny while delivering concrete benefits for exporters, manufacturers, and workers alike.

At the same time, the talks acknowledge the complexity of achieving a comprehensive agreement within a compressed timeline. The government’s cautious stance—awaiting a final U.S. decision before tariff adjustments take full effect—reflects a strategic preference for precision in policy design. The aim is to avoid unintended consequences that could arise from hasty tariff changes, ensuring that the final terms align with both Indonesia’s development priorities and the United States’ strategic objectives.

The broader implications for regional trade architecture are notable. A successful accord with the United States could position Indonesia as a more influential node in the Indo-Pacific economic landscape, potentially encouraging other partners to pursue similar structural reforms and cooperation. The balance of market access, supply-chain assurances, and governance reforms embedded in the deal would shape the competitiveness of Indonesian exports and could influence regional investment patterns over the medium to long term.

Conclusion

Indonesia’s negotiations with the United States are unfolding against a backdrop of strategic drive to diversify supply chains, bolster energy and food security, and expand collaborative defense and industrial capabilities. The government’s commitment to near-zero tariffs on a broad basket of goods, alongside measures to strengthen secure sourcing of critical minerals and enhance protections for U.S. firms, signals a comprehensive approach to deepen bilateral ties. If realized, the deal could reduce tariff exposure, improve market access, and foster greater investment in Indonesia’s manufacturing, energy, and technology sectors. The interplay between tariff relief, supply-chain governance, and policy reforms will determine how quickly and effectively the expected benefits materialize for businesses, workers, and consumers across both nations. The overarching message from Indonesian leadership remains clear: the country seeks a balanced, forward-looking economic relationship that yields tangible advantages across the Pacific corridor, while reinforcing its role as a reliable partner in a dynamic, evolving global trading system.