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Indonesia and the United States are still negotiating a reduction in tariffs on palm oil, even as new US tariff hikes are due to take effect within a day.
US President Donald Trump is set to soon impose a 19% tariff on Indonesian goods entering the United States, starting 7 August 2025 – tomorrow. Indonesia has asked for tariffs on goods the US does not produce, such as palm oil, to be cut to near zero. With the deadline looming, senior Indonesian minister Airlangga Hartarto said on Wednesday that his country was still trying to secure a reduction in palm oil tariffs.
"Negotiations are still ongoing," Airlangga, Indonesia's chief negotiator, told the Jakarta Globe before heading to the presidential palace.
Besides palm oil, resource-rich Indonesia is also seeking lower tariff rates on its exports of nickel, cocoa and coffee.
When Trump first launched his tariff campaign in April, Indonesian palm oil producers feared losing market share to neighbouring ASEAN member Malaysia. Indonesia is the leading supplier of palm oil to the United States, followed by Malaysia. Nevertheless, Indonesia managed to persuade Trump to lower the proposed tariff from 32% to 19% after offering certain trade concessions. Trump had initially threatened a 24% tariff in April, which rose slightly to 25% in July. In the end, Kuala Lumpur secured the same rate as Jakarta: 19%.
Trump had already imposed a blanket 10% tariff on foreign goods entering the US since April, in an effort to address trade imbalances. Even so, the United States remained Indonesia's largest source of trade surplus, with the bilateral trade surplus reaching US$8.57 billion between January and June. According to the Central Statistics Agency (BPS), Indonesia's exports of crude palm oil and its derivatives rose in the first half of 2025 to US$11.43 billion, up 8.91% year on year. The agency did not specify who the major buyers of Indonesia's exports were.
Source: Jakarta Globe