JAKARTA: Indonesian leader Prabowo Subianto on Wednesday (Jul 16) hailed a"new era of mutual benefit" with Washington after President Donald Trump announced Indonesian goods entering the United States would face a 19 per cent tariff, far below the 32 per cent he had earlier threatened.

"I had a very good call with President Donald Trump. Together, we agreed and concluded to take trade relations between Indonesia and the United States into a new era of mutual benefit," he wrote in an Instagram post, without providing details of the deal.

Trump had struck the pact in return for significant purchase commitments from Jakarta following negotiations, including a pledge to buy 50 Boeing jets.

The deal is among only a handful reached so far by the Trump administration ahead of an Aug 1 deadline for negotiations.

"This is an extraordinary struggle by our negotiating team led by the coordinating minister for economic affairs," Hasan Nasbi, the Indonesian president's spokesperson, told reporters on Wednesday.

He added that the deal was “progress that cannot be called small”.

Prabowo had sent his top economic minister to Washington. Nasbi said the Indonesian president had also negotiated directly with Trump over the phone.

Speaking to the media after returning to Indonesia following a trip to Europe, Prabowo called Trump a"tough negotiator".

"Finally, there's an agreement. We understand their interests, they understand ours," he said, adding that further negotiations will continue.

"LANDMARK DEAL"

Indonesia - the world's fourth-largest country and a member of G20 - ran a goods trade surplus of US$17.9 billion with the United States in 2024, according to the US trade representative.

The trade deal with Indonesia broadly resembles the framework for Washington’s deal with Vietnam, with a flat tariff on exports to the US roughly double the current 10 per cent and no levies on US exports to Indonesia.

It also included a penalty rate for so-called transshipments of goods from a “higher tariff country”, Trump said in a post on his Truth Social platform.

He added that Indonesia had committed to purchasing US$15 billion in US energy, US$4.5 billion of American farm products and 50 Boeing jets.

No time frame was specified for these purchases.

Prabowo said the Boeing purchase commitment was in line with his country's aim to grow its national airline Garuda Indonesia.

"Garuda is our pride, Garuda is our national flag carrier. Garuda was born in our war of independence, so Garuda must be a symbol of Indonesia," he said.

"We are determined, I am determined to grow Garuda, and for that, we need new planes. There isn't a problem because we need them. They want to sell, and Boeing planes are quite good."

It remains unclear when the new tariff rate for Indonesia will come into effect.

“This landmark Deal opens up Indonesia’s ENTIRE MARKET to the United States for the first time in History,” Trump wrote on Truth Social.

“I think it's a good deal for both parties, but we will have full access into Indonesia and we have a couple of those deals that are going to be announced.”

In particular, Trump indicated that copper would be something the US would be interested in importing from Indonesia.

“Now, Indonesia has some great product and they also have some very valuable earths and various other materials,” he told reporters on Tuesday.

“One of the things, as you know, they're known for is very high-quality copper, which we'll be using."

"MEETING POINT"

Nasbi, the Indonesian president's spokesperson, called the deal a"meeting point" between the two governments, noting that Indonesia's tariff rate was much lower than other countries in Southeast Asia.

Indonesia's former vice minister for foreign affairs, Dino Patti Djalal, told a Foreign Policy event Tuesday that government insiders had indicated they were happy with the new deal.

The Jakarta stock index rose as much as 0.8 per cent on Wednesday after the deal, which Indonesia's central bank said would provide a positive catalyst for economic activities.

Bank Indonesia, which cut rates on Wednesday, said the deal will have a positive impact on the archipelago's exports and economic growth, and provide certainty to financial markets.

"Well, 19 per cent is better than 32 per cent," Matt Simpson, a senior market analyst at City Index in Brisbane, said.

"Indonesian non-oil exports such as footwear and textiles will take a hit, but energy and agriculture are set to gain. Officials are, of course, pleased because they're in Trump's good books," he added.

Myrdal Gunarto, an economist with Maybank Indonesia, described the deal as relatively good, as Jakarta is getting a tariff below those imposed on other Southeast Asian neighbours.

"(The deal) opens more space for domestic lower monetary policy rate," he said, predicting it would also trigger capital inflows.

However, some economists in Indonesia have hit out at the deal with Washington.

"This is not an agreement. It's ... a one-sided agreement," Jakarta-based Centre for Strategic and International Studies (CSIS) executive director Yose Rizal Damuri told AFP on Wednesday.

But he predicted American consumers would likely bear the costs more than Indonesian businesses, with Trump's tariffs sweeping across many countries.

"The United States itself will be the one more affected. Prices will rise," he said.

Data on Tuesday showed US inflation spiked in June as the tariffs kicked on.

When asked about plans for a trip to the US, Prabowo suggested a potential visit in September and October, but joked about having to improve his skills at golf, a sport that Trump frequently enjoys.

“I'm a bit scared when asked to play golf. My golf is terrible. I have to take private golf lessons,” he said.

“I used to be good, but now I can't.”