New Trade Agreement: Indonesia and the United States Expand Coconut Oil Exports

The trade relationship between Indonesia and the United States has just reached a new milestone with the signing of a reciprocal trade agreement to facilitate Indonesian agricultural products. According to Jin10 and The Wall Street Journal, this agreement was officially announced recently, opening new opportunities for Jakarta’s strategic export items.

Agricultural Products Dominate in the New Trade

This agreement marks a significant change in the tariff policies between the two countries. While the U.S. maintains a 19% tariff on most imported goods from Indonesia, key agricultural products will enjoy special privileges. These include high-value export items that are considered the main drivers of Indonesia’s agricultural sector.

Meanwhile, Indonesia commits to eliminating or significantly reducing tariffs on most U.S. goods and to accepting U.S. standards and regulations for certain product categories.

Coconut Oil and Palm Oil: Strategic Export Items

Among the products granted duty-free access, coconut oil stands out as one of Indonesia’s most important exports. Along with palm oil, these two oils represent the pillars of Indonesia’s agricultural exports. Coconut oil is widely recognized for its applications in food, cosmetics, and energy industries, making it a high-value commodity in international trade.

Removing tariff barriers for coconut oil and other agricultural products is expected to significantly boost Indonesian exporters, expand market access in the U.S., and enhance competitiveness.

Economic Impact: The Trade Relationship Between the Two Countries

According to U.S. President Donald Trump, the basic framework for this agreement was established in July of last year, indicating a lengthy and strategic negotiation process. In 2024, the total trade volume between the U.S. and Indonesia is estimated at around $38 billion, with Indonesia’s exports mainly focused on agriculture, electronics, and other industrial products.

This agreement not only reflects the commitment of both nations to promote bilateral trade but also highlights the strategic importance of their economic relationship. The tariff exemptions for coconut oil and other agricultural products from Indonesia are seen as efforts to strengthen economic ties and trade cooperation in the region.