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Washington Today
By the People, for the People
U.S. and Indonesia Sign Trade Deal, Locking in 19% Tariffs
Agreement includes zero tariffs on most U.S. exports and commitments on export controls.
Published on Feb. 28, 2026
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The United States and Indonesia have announced a new trade deal that includes zero tariffs on virtually all U.S. exports to Indonesia and a 19% tariff on Indonesian goods. The deal formalizes an agreement reached last year and makes Indonesia the third country in Southeast Asia to lock in lower tariffs after Malaysia and Cambodia. As part of the agreement, Indonesia has agreed to open its borders wider to American goods and cooperate with the U.S. on export controls.
Why it matters
The deal strengthens President Trump's hand in trade negotiations with China ahead of his expected visit to Beijing. However, it also risks raising tensions with China, which is Indonesia's biggest trade partner. The agreement requires Indonesia to restrict exports of goods subject to U.S. export controls, including American technology, which could further strain relations with China.
The details
Under the deal, Indonesia agreed to roll back several long-standing trade barriers, including inspections of farm products, export restrictions on critical minerals, and local content requirements. Indonesia also committed to import $15 billion worth of U.S. energy including coal, oil and gas, and $13.5 billion in American airplanes and aviation equipment. The agreement also gives American companies access to Indonesia's critical mineral and oil resources.
- The deal was announced on Thursday, February 20, 2026.
- The agreement formalizes a deal the two countries made last July.
The players
United States
A country that has been engaged in trade negotiations with Indonesia.
Indonesia
A country that has agreed to open its borders wider to American goods and cooperate with the U.S. on export controls.
Donald Trump
The former U.S. president who had threatened Indonesia with a 32% tariff at one point last year.
Prabowo Subianto
The president of Indonesia who was in Washington on Thursday for a meeting of Mr. Trump's Board of Peace.
Anwar Ibrahim
The prime minister of Malaysia who was accused by critics of sacrificing the country's sovereignty after he made a trade pact with Mr. Trump in October.
What they’re saying
“The more of these that get signed, the harder it will be for China to remain quiet.”
— Deborah Elms, Head of trade policy at the Hinrich Foundation in Singapore
“Already under pressure from a flood of cheap Chinese imports, these industries are not in a position to withstand steep U.S. tariffs. By signing the U.S. deal, the Prabowo administration is effectively accepting an unfair bargain in order to stave off a wave of factory closures and manufacturing layoffs.”
— Priyanka Kishore, Economist in Singapore
What’s next
The Supreme Court is set to consider President Trump's sweeping use of emergency powers to enforce many of his tariffs.
The takeaway
This trade deal with Indonesia strengthens President Trump's hand in his negotiations with China, but it also risks raising tensions with China, Indonesia's biggest trade partner. The agreement requires Indonesia to restrict exports of goods subject to U.S. export controls, which could further strain relations between Indonesia and China.
