Indonesia drops trade barriers: us companies gain big

2025-07-23 general

washington, Wednesday, 23 July 2025.
Indonesia is set to eliminate tariffs on over 99% of goods from the United States. The country will also remove non-tariff barriers. This landmark agreement marks a significant win, potentially adding $50 billion in market access for us products. The us, in turn, will lower tariffs on Indonesian goods from 32% to 19%. Sectors like semiconductors and automotive stand to benefit. The deal includes contracts for billions in us aircraft, agriculture, and energy exports.

Deal specifics and market impact

The agreement, finalized on July 22, 2025, involves Indonesia eliminating tariffs on over 99% of U.S. goods [1]. This move is projected to provide U.S. goods with at least $50 billion in additional market access [5][6]. Indonesia will also remove non-tariff barriers, including pre-shipment inspections and restrictions on internet data flows [1][4]. In return, the U.S. will reduce its tariffs on Indonesian products from 32% to 19% [1]. These changes are expected to boost trade and investment between the two nations [7].

Sector winners and losers

Several sectors are poised to benefit significantly. U.S. automakers gain from Indonesia’s acceptance of U.S. Federal Motor Vehicle Safety Standards [1]. Tech companies stand to gain as Indonesia drops tariffs on internet data flows [1][4]. Agriculture benefits from contracts to supply $4.5 billion in U.S. agricultural products [4]. Energy companies will gain from contracts to supply $15 billion in liquefied natural gas, crude oil, and gasoline [4]. Companies that rely on parts or raw materials from China, Russia, or Vietnam and export to the U.S. may face a 40% tariff [2].

Investor considerations

Investors should monitor companies poised to capitalize on increased market access. Boeing is set to gain from Indonesia’s commitment to purchase $3.2 billion in U.S. aircraft [4][7]. Agricultural firms that produce soybeans, wheat, and cotton could see increased demand [4]. Energy companies involved in LNG and crude oil exports are also likely to benefit [4]. However, companies with supply chains that run through non-market economies may face challenges due to the 40% tariff on products containing components from those countries [2].

Geopolitical and strategic implications

The trade agreement also has broader geopolitical implications. Indonesia has agreed to remove export restrictions on industrial commodities, including critical minerals [1]. This commitment could secure the U.S. supply chains for essential resources. Indonesia’s agreement to join the Global Forum on Steel Excess Capacity signals a commitment to fair trade practices [1]. These moves, along with similar deals with the Philippines and Vietnam, suggest a broader U.S. strategy to strengthen economic ties in Southeast Asia [2].

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