US and Indonesia Finalize Landmark Trade Agreement to Boost Key Sectors

Historic Trade Agreement Reached

The United States and Indonesia officially finalized a landmark trade agreement on February 19, 2026, following an announcement from the White House. The agreement, confirmed by U.S. President Donald J. Trump and Indonesian President Prabowo Subianto, is designed to significantly boost trade across manufacturing, agriculture, and digital sectors.

The deal was reached during President Subianto's visit to Washington, D.C., where leaders also attended the inaugural meeting of the 'Board of Peace'.

Key Tariff Reductions and Market Access

Under the terms of the reciprocal trade agreement, Indonesia has committed to eliminating tariff barriers on more than 99% of U.S. products. This includes a wide range of goods such as:

• Agricultural products
• Health products
• Seafood
• Information and communications technology (ICT)
• Automotive products
• Chemicals

In return, the United States will maintain a 19% reciprocal tariff rate for most imports from Indonesia, a reduction from a previously threatened 32%. Certain identified Indonesian products, including select textile and apparel goods, will benefit from a 0% tariff rate.

Addressing Non-Tariff Barriers and Digital Trade

The agreement also tackles long-standing non-tariff barriers. Indonesia has pledged to:

• Remove local content requirements
• Eliminate burdensome certification and labeling standards
• Exempt food and agricultural products from import licensing regimes
• Accept U.S. federal motor vehicle safety and emission standards, and FDA standards for medical devices and pharmaceuticals
• Address intellectual property issues

Furthermore, the deal includes significant provisions for digital trade. Indonesia will eliminate tariffs on intangible products, support a permanent moratorium on customs duties for electronic transmissions at the World Trade Organization (WTO), and ensure a level playing field for U.S. electronic payment service companies.

Economic Impact and Commercial Commitments

The trade agreement is expected to generate substantial economic activity. Indonesia has indicated plans to purchase over $4.5 billion worth of U.S. agricultural products. Broader commercial agreements, valued at approximately $33 billion, encompass investments in energy, aerospace (including Boeing aircraft), and agriculture. Separately, U.S. and Indonesian companies signed deals worth $38.4 billion on February 18, covering sectors such as mining, energy, agribusiness, textiles, furniture manufacturing, and technology development. A Memorandum of Understanding (MOU) for Freeport-McMoRan to expand operations at the Grasberg mine is also expected to generate $10 billion annually.

U.S. Trade Representative Jamieson Greer stated that the agreement 'breaks down trade barriers' and advances American economic and national security interests. Indonesian Coordinating Minister for Economic Affairs Airlangga Hartato noted that the agreement will strengthen market access and competitiveness for Indonesian products. The deal aims to rebalance trade, as the U.S. recorded a goods trade deficit of an estimated $23.7 billion with Indonesia in 2025. The agreement is anticipated to take effect within 90 days, pending domestic approval procedures in both nations.