📌 Introduction: What Happened?
In a surprising move that caught the attention of world leaders and economists alike, former U.S. President Donald Trump announced a new trade deal with the Southeast Asian country of Indonesia. This deal came just after Trump had threatened to impose high tariffs on imported goods from multiple countries, including Indonesia.
But after what Trump called a “very good call” with Indonesian President Prabowo Subianto, things changed. The U.S. reduced the proposed tariff on Indonesian goods from 32% to 19%, and in return, Indonesia promised new economic access and large purchases from American companies.
This article breaks down the deal in very simple English, explaining:
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What the deal includes
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Why it matters
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How it affects the U.S., Indonesia, and other countries
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Reactions from experts and world leaders
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What it tells us about Trump's trade strategy
🔍 What Are Tariffs and Why Do They Matter?
Before we dive deeper, let’s understand tariffs. A tariff is a tax that a country places on products coming in from another country. For example, if the U.S. puts a 20% tariff on shoes from Indonesia, it means those shoes will cost 20% more when they arrive in the U.S.
Countries use tariffs to:
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Protect local businesses
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Punish unfair trade practices
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Negotiate better trade deals
Trump has often used high tariff threats as a negotiation tool. This Indonesia deal is one example of that method in action.
🇮🇩 The Deal: What Did Indonesia Agree To?
According to Trump and sources close to the talks, here’s what Indonesia agreed to do:
✅ 1. Lower Tariffs on U.S. Products
Indonesia agreed to reduce taxes (tariffs) on many U.S. goods entering their country — especially farm products and manufactured items. These were areas where the U.S. had complained of being treated unfairly.
✅ 2. Big Purchases from the U.S.
Indonesia promised to buy billions of dollars worth of U.S. goods, including:
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$15 billion in American energy (like gas and oil)
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$4.5 billion in U.S. agricultural products (like wheat, soy, and corn)
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50 Boeing airplanes, a major win for the U.S. aircraft industry
✅ 3. Open Market Access
Trump claimed that U.S. companies would now get “full access” to the Indonesian market — meaning fewer restrictions and easier trade.
📞 How the Deal Happened: The Phone Call That Changed Everything
Initially, Trump had sent a letter to Indonesia warning of a 32% tariff on their exports to the U.S. This shocked Indonesian officials who thought a deal was already close.
But then, President Prabowo spoke to Trump on the phone. After this call, the tariff rate was dropped to 19%, and the deal was sealed.
Prabowo posted on Instagram, calling the deal a “new era of mutual benefit.” Though he did not share many details, it showed a public agreement and positive tone between both leaders.
🌐 Who Else Is Affected by Trump’s Tariff Plans?
Indonesia is not the only country on Trump’s radar. The U.S. had also sent tariff warnings to:
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European Union
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Canada
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Mexico
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Japan
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South Korea
All these countries were told that new tariffs would start on August 1 unless deals were made. This approach caused a flurry of trade talks around the world.
Trump is using this “threat-then-deal” strategy with multiple countries, pushing them to give the U.S. better trade terms.
📈 Why Indonesia Is Important to the U.S.
Indonesia is one of America’s top 25 trading partners. In 2024, Indonesia exported about $28 billion worth of goods to the U.S. Most of these were:
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Clothing
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Shoes
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Electronics
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Palm oil (used in cosmetics and food)
These are important products for many American consumers. At the same time, the U.S. sees Indonesia as a valuable partner in Asia — both economically and politically.
🧠 What Do Experts Say?
🎓 Professor Stephen Marks (Pomona College, California)
He said the deal’s political value might be bigger than the economic value. In other words, the announcement may sound great, but the real impact could be smaller.
He explained that Indonesia relies less on the U.S. than other Asian countries like China or Japan. However, the U.S. is still a major buyer of key Indonesian products, especially palm oil and footwear.
🇺🇸 Trump’s Trade Style: Deal or Threat?
This deal shows Trump’s typical trade style:
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Start with a threat (high tariff)
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Force negotiations
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Announce a win (deal with buying promises)
Some say it’s effective. Others say it’s risky and hurts trust between countries.
Past Similar Deals:
Trump has also made similar announcements with:
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China
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Vietnam
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The UK
In most of these, the U.S. kept high tariffs, and not all terms were clear. Some agreements lacked follow-up or full enforcement.
📢 What Are Other Leaders Saying?
🇨🇦 Canada
Canadian Prime Minister Mark Carney said Canada might accept new tariffs that were previously seen as “unthinkable.” This shows how many countries are adjusting their expectations when dealing with Trump.
💬 Will More Deals Come Soon?
Yes, likely. According to Everett Eissenstat, a former Trump adviser, more trade deals are expected soon.
He said it’s better for countries to stay at the negotiation table, even if they don’t get everything they want. Leaving the talks might result in worse tariffs or no access to the U.S. market.
📊 Summary Table: Deal Overview
| 🔹 Item | 🔸 Details |
|---|---|
| 🇮🇩 Country Involved | Indonesia |
| 📞 Leaders | Trump & President Prabowo Subianto |
| 📉 Tariff Before | 32% (planned by U.S.) |
| 📈 Tariff After | 19% |
| 🛍️ U.S. Exports Promised | $15B Energy, $4.5B Agriculture, 50 Boeing jets |
| 🔓 U.S. Market Access | Claimed “full access” into Indonesia |
| 📦 Indonesia Exports to U.S. | $28B in 2024 (clothes, shoes, electronics, palm oil) |
| 🧠 Expert Opinion | More political than economic benefit |
💡 Final Thoughts
This deal between the U.S. and Indonesia is part of a larger global trade chess game. Trump is using aggressive tactics — high tariffs and public threats — to get what he calls “better deals for America.”
But the long-term effects are still unclear. Some businesses may benefit, while others may face confusion and cost increases. What’s certain is that trade politics will stay heated in the coming months.
📣 What’s Next?
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Will other countries agree to Trump’s demands?
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Will these deals last beyond the headlines?
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Will the global trade system stay stable?
Only time will tell. But for now, the U.S.-Indonesia deal gives us a strong look at how modern trade politics works in Trump’s world.
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