Former US President Donald Trump has once again shaken the global trade space with a bold new announcement. Just days before his August 1 trade deadline, Trump has signed a fresh trade deal with Indonesia, changing the rules of two-way trade.
Let’s understand what this deal means, how it works, and why India should take it seriously.
What’s the New US-Indonesia Trade Deal?
Trump’s new deal gives duty-free access to American companies in Indonesia, meaning they can sell goods and services in the Indonesian market without paying any import tax. But in return, imports coming from Indonesia into the US will be taxed at 19%.
This agreement is clearly one-sided in favor of the US. It gives American companies an easy way to sell more in Indonesia, while restricting imports from Indonesia into the US with a heavy tariff.
Why This Deal Is Important
The US and Indonesia had a total trade value of $40 billion last year. However, the US had a $18 billion trade deficit with Indonesia. This means Indonesia sold more to the US than it bought from the US.
Key products that the US imports from Indonesia include:
- Palm oil
- Shoes
- Electronics
- Tires
- Seafood
Now with the 19% tariff, these items will become more expensive in the US.
What Did Trump Say About India?
While announcing this deal, Trump also commented on ongoing trade talks with India. He said that the US wants a “low-tariff, fair-trade” agreement with India. He believes that India will allow American companies to compete freely in its market.
Two weeks ago, Trump had already suggested that the India-US trade deal would be “different” with very low tariffs. However, experts warn India to proceed carefully.
Tariff Threat Looming Over India
Back on April 2, Trump had proposed different tariff rates on 57 countries, including a 26% import tariff on Indian goods. Although this move was delayed for 90 days, the grace period ended on July 8.
Also Read: Trump’s 30% Tariff Shocks Europe and Mexico Days Before India Deal
Now, Trump has warned that if any country—including India—fails to sign a deal by August 1, the new tariffs will automatically be applied. This includes products like:
- Pharmaceuticals
- Metals (e.g., copper – 50% proposed tariff)
- Other industrial goods
What Should India Do?
According to trade expert Ajay Srivastava of the Global Trade Research Initiative (GTRI), India must be very careful. He warns that:
- Trump often announces deals before they are officially signed.
- For example, Trump said Vietnam agreed to a 20% tariff, but Vietnamese officials said they only agreed to 11%.
- India should insist on written, public agreements and not rely on verbal or social media statements.
- Any one-sided agreement, especially one that allows duty-free imports from the US without equal benefits, could hurt sectors like agriculture and dairy in India.
Srivastava adds, “It’s better to avoid a deal than to sign a bad one.”
Final Thoughts
Trump’s trade strategy is clear—get more benefits for the US, even if it means upsetting old partners. With Indonesia, he’s shown how a deal can be unbalanced. Now, all eyes are on India.
As August 1 approaches, India must negotiate transparently, avoid being pressured, and ensure that any agreement brings equal benefits to both sides.
Disclaimer: The details in this article are based on current news reports and statements. Policy decisions and trade agreements are subject to change. Please refer to official government releases for final information.
