Indonesia offers to cut duties on US goods, buy $500 million of wheat

Indonesia has offered to cut duties on key imports from the United States to “near zero” and to buy $500 million worth of US wheat as part of its tariff talks with Washington, its lead negotiator and a wheat industry association said on Friday.

Chief economics minister Airlangga Hartarto, who is Indonesia’s lead negotiator, also confirmed that state carrier Garuda Indonesia would buy more Boeing planes as part of a $34 billion pact with US partners due to be signed next week.

Indonesia, which ran a goods trade surplus of $17.9 billion with the United States in 2024 according to the US Trade Representative, is facing a 32 per cent tariff in US markets and has proposed increasing US imports to facilitate trade talks between the two sides.

Airlangga said the Indonesian government has offered to cut tariffs on key American exports, including agricultural products, to near-zero from between 0 per cent and 5 per cent at present.

“It will be near zero (tariffs for US main exports), but it will depend as well on how much the tariffs we get from the US,” Airlangga said.

Garuda’s CEO has said it is in discussions with US Boeing to buy up to 75 units of aircraft. Garuda group did not respond to requests for comment on Friday.

The wheat purchases are also part of next week’s pact with US partners. The chairman of Indonesia’s wheat flour mills association, Franciscus Welirang, said its “members will purchase two million tonnes in total through tenders with a competitive price.”

“The point is all of the members will buy US wheat,” Welirang, who is also a director at Indofood, told Reuters.

The US counterparts in the wheat deal include Cargill, Bunge Global SA, Pacificor, Archer-Daniels-Midland, Columbia Grain International, and United Grain Corporation, Welirang added.

US exports to Indonesia include soybeans, petroleum gases and aircraft, Indonesian government data showed.

When asked whether the trade talks include military deals, Airlangga said they were “not part of the negotiation”.

Susiwijono Moegiarso, a senior official with Indonesia’s Coordinating Ministry for Economic Affairs, told Reuters that in return, Jakarta has asked the United States for preferential tariffs on its main exports, including electronics, textiles and footwear.

“We want them to lower the tariffs (for those goods) as low as possible,” he said.

Indonesia has also offered the United States opportunities to invest in critical minerals projects, including in the country’s abundant resources of copper, nickel and bauxite.

Meanwhile Indonesia broke ground Sunday on a $5.9 billion megaproject for EV battery production backed by Chinese giant CATL, despite NGOs raising concerns over a lack of environmental guarantees.

Indonesia is the world’s largest nickel producer and it is trying to capitalise on its vast reserves, with a 2020 export ban spurring a domestic industrial boom of the key metal used in EV batteries and stainless steel.

The EV battery project will include a $4.7 billion investment on the eastern island of Halmahera and a $1.2 billion investment in West Java, energy minister Bahlil Lahadalia said in a speech alongside President Prabowo Subianto.

“According to my calculation, it won’t take long, in probably between five to six years we will be able to reach energy self-sufficiency,” Prabowo said at a groundbreaking ceremony in Karawang, West Java.

Bahlil said the Halmahera complex will focus on mining, smelting and production of cathodes which are a key component in rechargeable batteries.

The West Java complex will focus on battery cell production, the minister said. The two politicians did not say when the megaproject was slated to be operational, but Indonesian officials have said a CATL plant in Halmahera would open in March next year.

Alongside CATL, the Halmahera complex is backed by China’s Zhejiang Huayou Cobalt and Indonesia’s state-owned Antam.

Climate Rights International (CRI) and Greenpeace Indonesia this week issued a call for greater assurances from Jakarta that measures were in place to protect the surrounding environment at the bigger complex in eastern Halmahera.

Environmental group Mining Advocacy Network (Jatam) said in a statement Saturday that Jakarta was “chasing vague economic growth while consciously ignoring the people’s scream” to end damage to the environment and residents’ livelihoods.

Halmahera, a once-pristine island in the Maluku archipelago, has seen environmental damage increase as operations have grown at a large industrial park that hosts the world’s largest nickel mine.

A CRI report this month warned the Indonesian government was allowing environmental damage to go unchecked around the Weda Bay mine and the industrial park that hosts it.

Agencies