US Indonesia trade deal close to called off after Indonesia backtracks: report
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Efforts to finalise a sweeping trade agreement between the United States and Indonesia are facing renewed uncertainty, with US officials accusing Jakarta of retreating from commitments made earlier in the year, reported Financial Times.
The deal, which was announced by US President Donald Trump in July, is now at risk of unravelling amid disagreements over tariff concessions, market access, and binding obligations.
Washington signals concern over “backtracking”
According to The Financial Times, US Trade Representative Jamieson Greer believes Indonesia is “backtracking” on several key commitments included in the original understanding.
People familiar with the talks told the publication that Indonesian negotiators have pushed back against certain binding provisions, signalling they may not be able to implement the measures previously agreed.
Washington’s concerns centre particularly on Indonesia’s reluctance to remove non-tariff barriers affecting US industrial and agricultural exports, as well as hesitations on digital trade provisions.
US officials reportedly view these as essential to creating a level playing field and ensuring the agreement aligns with broader trade standards Washington is pursuing across the region.
A person familiar with the discussions described Jakarta’s shift in stance as “extremely problematic,” adding that Indonesia’s request to renegotiate commitments into non-binding terms is “not being well-received” by the US.
The source cited in the report warned that Indonesia “may be at risk of losing its deal” if the divergences cannot be resolved.
Indonesia says talks continue without major issues
Despite the reported tensions, Indonesian officials have publicly downplayed the extent of the frictions.
A Reuters report cited an Indonesian official who said on Wednesday that tariff negotiations remained ongoing and that “no specific issues” had arisen during the discussions.
The deal, announced by President Trump in mid-July, initially involved the US slashing the threatened reciprocal tariff rate on Indonesia to 19%, down from 32% mentioned in a “tariff letter” earlier that month.
In return, Indonesia had “committed,” according to Trump, to purchase $15 billion worth of US energy products, $4.5 billion in agricultural goods, and 50 Boeing aircraft.
Trump also said the agreement would render US exports to Indonesia “tariff and non-tariff barrier free.”
The USTR and Indonesia’s trade ministry did not respond to requests for comment regarding the current state of negotiations.
Past frictions and regional pushback
This is not the first time trade negotiations between Washington and Jakarta have encountered friction.
In November, The Financial Times reported that Indonesia had rejected a “poison pill” clause—similar to provisions agreed by Malaysia—that would allow the US to revoke the trade agreement if Indonesia pursued any rival deal considered contrary to American strategic interests.
The Indonesia talks also reflect broader challenges the US has faced in structuring trade deals across Asia under Trump’s presidency.
Earlier agreements announced with South Korea and Japan were later revised or clarified after local governments pushed back on financial commitments and profit-sharing terms described by Trump.
As negotiations continue, both countries face pressure to reconcile their differences and preserve a deal that—if implemented—would mark a significant shift in US–Indonesia trade ties.
Without progress, the agreement risks stalling at a critical moment for regional economic diplomacy.
The post US Indonesia trade deal close to called off after Indonesia backtracks: report appeared first on Invezz
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US Indonesia trade deal close to called off after Indonesia backtracks: report
Share:
Efforts to finalise a sweeping trade agreement between the United States and Indonesia are facing renewed uncertainty, with US officials accusing Jakarta of retreating from commitments made earlier in the year, reported Financial Times.
The deal, which was announced by US President Donald Trump in July, is now at risk of unravelling amid disagreements over tariff concessions, market access, and binding obligations.
Washington signals concern over “backtracking”
According to The Financial Times, US Trade Representative Jamieson Greer believes Indonesia is “backtracking” on several key commitments included in the original understanding.
People familiar with the talks told the publication that Indonesian negotiators have pushed back against certain binding provisions, signalling they may not be able to implement the measures previously agreed.
Washington’s concerns centre particularly on Indonesia’s reluctance to remove non-tariff barriers affecting US industrial and agricultural exports, as well as hesitations on digital trade provisions.
US officials reportedly view these as essential to creating a level playing field and ensuring the agreement aligns with broader trade standards Washington is pursuing across the region.
A person familiar with the discussions described Jakarta’s shift in stance as “extremely problematic,” adding that Indonesia’s request to renegotiate commitments into non-binding terms is “not being well-received” by the US.
The source cited in the report warned that Indonesia “may be at risk of losing its deal” if the divergences cannot be resolved.
Indonesia says talks continue without major issues
Despite the reported tensions, Indonesian officials have publicly downplayed the extent of the frictions.
A Reuters report cited an Indonesian official who said on Wednesday that tariff negotiations remained ongoing and that “no specific issues” had arisen during the discussions.
The deal, announced by President Trump in mid-July, initially involved the US slashing the threatened reciprocal tariff rate on Indonesia to 19%, down from 32% mentioned in a “tariff letter” earlier that month.
In return, Indonesia had “committed,” according to Trump, to purchase $15 billion worth of US energy products, $4.5 billion in agricultural goods, and 50 Boeing aircraft.
Trump also said the agreement would render US exports to Indonesia “tariff and non-tariff barrier free.”
The USTR and Indonesia’s trade ministry did not respond to requests for comment regarding the current state of negotiations.
Past frictions and regional pushback
This is not the first time trade negotiations between Washington and Jakarta have encountered friction.
In November, The Financial Times reported that Indonesia had rejected a “poison pill” clause—similar to provisions agreed by Malaysia—that would allow the US to revoke the trade agreement if Indonesia pursued any rival deal considered contrary to American strategic interests.
The Indonesia talks also reflect broader challenges the US has faced in structuring trade deals across Asia under Trump’s presidency.
Earlier agreements announced with South Korea and Japan were later revised or clarified after local governments pushed back on financial commitments and profit-sharing terms described by Trump.
As negotiations continue, both countries face pressure to reconcile their differences and preserve a deal that—if implemented—would mark a significant shift in US–Indonesia trade ties.
Without progress, the agreement risks stalling at a critical moment for regional economic diplomacy.
The post US Indonesia trade deal close to called off after Indonesia backtracks: report appeared first on Invezz
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