Jakarta proposes near-zero tariffs and $500M wheat deal to ease tensions
Indonesia has made a bold offer to the United States in a bid to ease trade tensions: the Southeast Asian nation is proposing to slash import duties on key American goods to near zero and purchase $500 million worth of U.S. wheat, according to top officials and industry representatives.
Chief economics minister Airlangga Hartarto confirmed Friday that Indonesia’s government aims to use tariff reductions and significant purchases as leverage to secure lower duties on its exports. As part of this effort, state airline Garuda Indonesia is also expected to sign a $34 billion agreement with U.S. partners next week, which includes plans to acquire Boeing aircraft.
Wheat, aircraft, and a strategic trade reset
Indonesia’s wheat flour mills association confirmed that its members will collectively buy two million tons of U.S. wheat through competitive tenders. “The point is all of the members will buy U.S. wheat,” said association chair Franciscus Welirang, who is also a director at Indofood.
The wheat deal involves major American agribusinesses such as Cargill, Bunge Global, Pacificor, ADM, Columbia Grain International, and United Grain Corporation. This agricultural concession is part of a broader strategy by Jakarta to maintain access to the U.S. market amid tariff threats.
In 2024, Indonesia ran a $17.9 billion trade surplus with the U.S., but now faces potential 32% duties on its goods. In response, Airlangga said Indonesia is offering to cut its existing tariffs on American exports—currently between 0% and 5%—to nearly zero, depending on what the U.S. agrees to in return.
Jakarta presses for tariff relief on key exports
Indonesian officials are seeking preferential access for their electronics, textiles, and footwear in exchange. “We want them to lower the tariffs (for those goods) as low as possible,” said Susiwijono Moegiarso from the Coordinating Ministry for Economic Affairs.
The trade discussions do not include military agreements, according to Airlangga. However, they do feature proposals for U.S. investment in Indonesia’s critical minerals sector, particularly copper, nickel, and bauxite—resources essential for batteries and green technologies.
Next week’s deal could shape future U.S.-Indonesia trade
In addition to the wheat and aircraft announcements, the pact expected next week could redefine the trade relationship between the two nations, setting the stage for long-term collaboration across multiple sectors. The outcome will also influence how other U.S. trade partners approach negotiations ahead of the July 9 tariff decision deadline.
