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Indonesia is expected to maintain its dominance of the US palm oil market after the United States agreed to cut reciprocal tariffs on imports from Jakarta from 32% to 19%, a rate far lower than that facing rival producer Malaysia.
By contrast, Malaysia faces a tariff of 25%, according to a letter issued by US President Donald Trump last week. Washington has also imposed a baseline 10% tariff on both palm oil-producing countries, in line with the rest of the world.
Indonesian Agriculture Minister Andi Amran Sulaiman said on Thursday that this gap in tariff rates could give Jakarta an edge over Malaysia in palm oil trade with the United States.
"Our only competitor in crude palm oil is Malaysia, isn't it? This is a golden opportunity for our agricultural sector," he told reporters in Jakarta.
Data from the Indonesian Palm Oil Association (GAPKI) shows the country exported 2.2 million tonnes of palm oil to the United States last year, worth close to $2.9 billion. Indonesia accounts for around 85% of US palm oil imports.
Fadhil Hasan, head of international affairs at GAPKI, recently warned that the United States could shift towards buying Malaysian palm oil if Jakarta failed to secure a lower tariff. The higher the tariff, the greater the cost of imported goods passed on to American consumers.
According to Bernama, the United States bought 191,000 tonnes of Malaysian palm oil last year, equivalent to about 10% of its palm oil imports.
Malaysian Trade Minister Tengku Zafrul Aziz said his country was still negotiating with the Trump administration following Indonesia's deal, noting that Kuala Lumpur was seeking "an outcome fair to both sides."
Speaking in Kuala Lumpur on Wednesday, as quoted by The Star, Zafrul added: "We still have time, and the most important thing is to ensure these negotiations benefit both countries."
The tariff rate imposed on Malaysia has risen to 25%, up one percentage point from the 24% rate announced earlier in April.
Source: Bernama