The US and Indonesia have finalized a reciprocal trade agreement that is expected to significantly expand bilateral agricultural trade and improve long-term cooperation in food supply chains, agri-inputs, and market access.
The agreement, confirmed by US President Donald J Trump and Indonesian President Prabowo Subianto, is being viewed as a strategic move to deepen engagement with one of Southeast Asia’s fastest-growing food markets.
Wider access for farm commodities
A central feature of the agreement is Indonesia’s decision to eliminate tariffs on more than 99% of US products, including a broad basket of agricultural goods.
The move is expected to ease entry for commodities such as wheat, soybeans, dairy products, meat, and processed foods, which have seen rising demand in Indonesia due to population growth, urbanization, and changing consumption patterns.
In addition to tariff removal, Indonesia has agreed to address several regulatory hurdles that had previously slowed agricultural imports. The new framework simplifies certification and labeling procedures, removes certain pre-shipment requirements, and exempts food and farm products from complex import licensing systems.
These changes are expected to make trade flows faster and more predictable for exporters and agribusiness companies.
Immediate trade commitments and commercial deals
Indonesia has indicated plans to purchase more than USD 4.5 billion worth of US agricultural products as part of a broader set of commercial agreements valued at approximately USD 33 billion.
These deals also span energy and aerospace sectors, but agriculture remains a key component, reflecting Indonesia’s need to secure reliable food and feed supplies.
The agreement also includes cooperation to strengthen supply chain resilience, prevent duty evasion, and facilitate smoother trade in industrial materials and inputs linked to agriculture.
Indonesia will remove restrictions on exports of certain industrial commodities and critical minerals, which play an important role in fertilizer production, farm machinery manufacturing, and agri-infrastructure development.
Digital trade and input linkages to support modern agriculture
Provisions on digital trade are expected to benefit the agricultural technology ecosystem by eliminating tariffs on digital products and supporting open electronic commerce systems.
This could enable greater movement of precision farming tools, data-driven advisory services, and digital payment platforms that are increasingly integrated into modern agri-value chains.
Another notable feature is a mechanism allowing some Indonesian textile exports to receive duty-free access to the US market if they are produced using American cotton and textile inputs. This linkage is expected to generate additional demand for US cotton while strengthening value chain integration between the two economies.
Rebalancing trade in a key southeast Asian market
The US currently runs a goods trade deficit with Indonesia, estimated at USD 23.7 billion in 2025. By expanding export opportunities—particularly in agriculture and energy—the agreement aims to rebalance trade while ensuring stronger participation of US producers in Indonesia’s expanding market.
For Indonesia, the deal supports food security objectives by diversifying import sources and ensuring access to competitively priced agricultural commodities. For global markets, analysts see the agreement as a development that could reshape commodity flows into Southeast Asia, a region that is becoming increasingly important for exporters worldwide.
Both countries are expected to complete their domestic approval procedures in the coming weeks, after which the agreement will come into effect. Once implemented, it is likely to deepen agricultural engagement between the two nations and reinforce Southeast Asia’s role as a strategic hub in global food trade.