Former President Donald Trump has unveiled a new tariff agreement with Indonesia, showcasing a complex interplay of negotiations as he continues to threaten high tariffs on numerous countries. The announcement comes on the heels of statements made by Canadian PM Mark Carney. He suggested that Canada could be amenable to terms involving tariffs that previously would have been intolerable.
In an angry series of tweets over the weekend, Trump doubled down on his administration’s plans to impose massive tariffs on many countries. He followed through with threatening letters to dozens of countries, threatening to impose high tariffs beginning August 1. The ex-prez bragged that his latest call with Indonesia’s president resulted in reduced tariffs. This development comes as a hopeful sign of improving trade relations between the two countries.
Included in this sweeping new arrangement, Indonesia has committed to reducing trade tariffs on U.S. exports. In return, Trump has agreed to cut tariffs on products coming into the U.S. from Indonesia down to 19%. He stressed that this agreement would give “complete access” for US companies trying to penetrate the Indonesian market.
Indonesia is doubling down on this commitment today by agreeing to purchase $15 billion worth of U.S. energy. They will contribute $4.5 billion towards the purchase of American agricultural products. The Southeast Asian nation’s national flag carrier has committed to taking delivery of 50 Boeing jets. This agreement will deepen economic connections between the two countries.
Trump’s ongoing tariff threats target some of America’s largest trading partners, including the European Union, Canada, Mexico, Japan, and South Korea. The U.S. administration has announced similar partnerships with other countries including the United Kingdom, China, and Vietnam.
Nevertheless, as promising as the agreement with Indonesia sounds, details and outstanding questions on key terms are still unconfirmed. Indonesian officials were reportedly taken aback when they got a letter from Trump. The letter established plans for a 32% tariff on their products, which was at odds with their understanding of a done deal.
Everett Eissenstat, a partner at Squire Patton Boggs, noted that in many respects the dynamics have changed on some trade talks. He pointed out that countries have started to dramatically lower their sights in terms of what they expect to gain from tariff deals with the U.S.
“The tone is changing a lot.” – Everett Eissenstat
The Trump way has been to either leave existing high U.S. tariffs untouched, or create a dangerous level of uncertainty about future negotiations. He is attempting to do this by forcing the hand of our global trade partners. Next, we will have to see how these major developments will affect the international stage and global trade patterns moving forward.