US–Indonesia trade deal faces breakdown over Jakarta's revisions

A trade agreement finalized between the United States and Indonesia in July is now in jeopardy, as Indonesian authorities have reportedly walked back several key commitments, according to a senior U.S. official.

“They’re reneging on what we agreed to in July,” the official said on Tuesday, speaking anonymously and declining to specify which parts of the deal Indonesia is reconsidering.

In response, an Indonesian government representative said on Wednesday that negotiations on tariff terms were still proceeding in line with what leaders from both countries had endorsed. The official, also speaking anonymously, added that some language in the agreement still needed to be harmonised.

Under the July deal, Indonesia had pledged to remove tariffs on more than 99% of U.S. products and eliminate all non-tariff barriers affecting American companies. In return, Washington agreed to scale back its proposed tariffs on Indonesian goods—from 32% to 19%.

U.S. President Donald Trump had celebrated the agreement when it was announced on July 15, calling it “a huge win for our Automakers, Tech Companies, Workers, Farmers, Ranchers, and Manufacturers.”

However, according to the U.S. official, Indonesian negotiators have since informed U.S. Trade Representative Jamieson Greer that they cannot accept certain binding provisions and want to revise them. U.S. officials fear these changes could leave the United States with a weaker deal compared to its recent agreements with Malaysia and Cambodia. The Financial Times previously reported that Washington believes Indonesia is “backsliding” on commitments to remove non-tariff barriers and address digital trade issues.

The U.S. Trade Representative’s office has not commented publicly on the matter.

Last week, U.S. Treasury Secretary Scott Bessent said at a New York Times DealBook event that Indonesia had become “a little recalcitrant” regarding the deal, though he did not provide details. He contrasted Indonesia’s position with Malaysia’s, noting Malaysia had eliminated thousands of tariff lines and improved trade flows with the United States.