Jakarta – Observers say the US reciprocal tariff deal will hamper Indonesia’s commitment to accelerate the energy transition and achieve energy independence. Firdaus Cahyadi, Founder of Indonesian Climate Justice Literacy, believes that the terms of the tariff reduction are very burdensome for Indonesia.
“The trade tariff negotiations between Indonesia and the US were indeed able to reduce tariffs from 32 to 19 per cent. However, the conditions are very burdensome for Indonesia,” he told tanahair.net, Friday, 18 July.
On Wednesday, US President Donald Trump announced that a landmark trade deal with Indonesia had been reached. Trump also explained that Indonesia must fulfil several trade commitments as a form of reciprocity. One of them is the Indonesian government’s willingness to purchase US energy products worth approximately USD 15 billion.
“The energy imported from the US is fossil energy, such as crude oil, LNG, metallurgical coal, and hydrocarbon gas liquids. The import obligation will prolong Indonesia’s dependence on fossil fuels. The longer Indonesia depends on fossil fuels, the longer it will take to make an energy transition. From an environmental perspective, this is very detrimental,” Firdaus continued.
He also added that the outcome of this negotiation reflects President Prabowo Subianto’s failure to fulfil his promise to realise energy self-sufficiency and accelerate the energy transition.
U.S. Energy Information Administration (EIA) data show that during 2020-2024, U.S. energy exports to Indonesia averaged nearly USD 3 billion per year, primarily in the form of crude oil, LNG, and metallurgical coal. With the new tariff deal, import volumes are expected to jump by 50 per cent. According to Firdaus, this increase in imports will further narrow the space for developing a renewable energy-based energy mix in Indonesia.
Kadin: Opportunity to boost exports
In addition, Indonesia will also import agricultural products from the US worth USD 4.5 billion or equivalent to IDR 73 trillion. In the aviation sector, Indonesia, through its national airline Garuda Indonesia, is set to purchase 50 Boeing aircraft. The deal is part of a “mutually beneficial trade relationship” that strengthens the United States’ economic position while benefiting its Southeast Asian trading partners.
Kadin Indonesia Chairman Anindya Bakrie, as reported by Antara News, said that this deal presents an opportunity to boost national exports. He added that the results of the Indonesian government’s negotiations with the US are better than those of many other countries and should be appreciated, given that they were achieved amid Indonesia’s position of recording a trade surplus with the US.
Presidential Communications Chief Hasan Nasbi said that the outcome of the trade negotiations and the tariff reduction from the US were significant diplomatic achievements. “This is not a small progress, and we should be grateful,” Hasan said at a press conference on Wednesday, 16 July.
However, he declined to elaborate on the details of the agreement. Hasan stated that all official explanations would be delivered directly by the negotiating team and President Prabowo Subianto upon their return from an overseas visit. (Hartatik/nsh)
Banner photo: President Prabowo Subianto gives a statement to the media at Halim Perdanakusuma Air Force Base, Jakarta, on Wednesday, 16 July 2025. Source: BPMI Setpres/Muchlis Jr
