US trade deal with Indonesia at risk of collapse, US official says

WASHINGTON: A US trade agreement reached with Indonesia in July is at risk of collapsing because Jakarta has backtracked on several commitments it made as part of the deal, a US official said on Tuesday.

“They’re reneging on what we agreed to in July,” said the official, who spoke on condition of anonymity, giving no details about which specific commitments Indonesia was now questioning.

Asked about the comments, Indonesian officials said on Wednesday that the talks between two sides are still ongoing, with no specific issues arising during negotiations.

“Dynamics in the negotiation process are normal. The Indonesian government hopes that an agreement can be reached soon that is beneficial to both parties,” said Haryo Limanseto, a spokesperson for Indonesia’s Ministry for Economic Affairs.

The ministry is headed by Minister Airlangga Hartarto, the chief negotiator for the tariff talks between Indonesia and US Earlier on Wednesday, an Indonesian government source said that harmonisation of language was required for the agreement.

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The two countries in July said Indonesia agreed to eliminate tariffs on more than 99% of US goods and scrap all non-tariff barriers facing American firms, while the US will drop threatened tariffs on Indonesian products to 19% from 32%.

US President Donald Trump first announced the deal on July 15, calling it “a huge win for our Automakers, Tech Companies, Workers, Farmers, Ranchers, and Manufacturers.”

But Indonesian officials have told US Trade Representative Jamieson Greer that Jakarta cannot agree to some binding commitments and wants to reframe them, the US official said.

US officials believe that would lead to worse agreements for the United States than recent deals it has struck with two other Southeast Asian countries, Malaysia and Cambodia, the official said, confirming details first reported earlier on Tuesday by the Financial Times.

The FT reported US officials believe Indonesia is “backsliding” on the elimination of non-tariff barriers on industrial and agricultural exports from the US as well as commitments to take action on digital trade issues.

No comment was immediately available from USTR. US Treasury Secretary Scott Bessent last week told a New York Times Dealbook event that Indonesia “was getting a little recalcitrant” on its trade deal with the United States, but did not elaborate.

Malaysia, by contrast, had proven to be a good actor and had dropped thousands of line tariffs so trade between the US and that country was flowing much better.