The United States has agreed to exempt Indonesian exports of palm oil, cocoa and rubber from a 19% tariff imposed earlier this month, Indonesia’s senior economic minister said on Tuesday, August 26. 

Airlangga Hartarto, the Coordinating Minister for Economic Affairs and Indonesia’s chief tariff negotiator, said the exemption would apply once both sides reach a final agreement.  

“We are waiting for their response, but during the meeting, basically, the exemption has been agreed for products not produced in the US, such as palm oil and cocoa and rubber … it will be zero or close to zero,” he told Reuters. The US embassy in Jakarta did not immediately respond to a request for comment. 

Indonesia is the world’s largest exporter of palm oil and a major supplier of rubber. Since August 7, exports of these commodities have been subject to the 19% tariff, the same rate applied to Thailand and Malaysia, and just below Vietnam’s 20%. Jakarta had been among the first countries to strike a preliminary tariff deal with Washington in July but still faced the new duties. 

To support its position in the talks, Indonesia offered billions of dollars worth of investment in the United States and pledged to purchase American crude oil, liquefied petroleum gas (LPG), planes and agricultural products. It also committed to zero tariffs on nearly all US goods entering its market. 

The two sides also discussed potential US investment in Indonesia’s energy sector. According to Airlangga, this included fuel storage development involving Indonesia’s sovereign wealth fund Danantara and state energy company Pertamina. 

Airlangga said certainty on US tariffs, combined with progress in negotiations on a free trade agreement with the European Union, could help Indonesia achieve its growth target of 5.4% in 2026, compared with about 5% this year.  

“They bring an optimistic perception from the global market since most investors are looking for certainty, and Indonesia is one of the countries that provide global certainty,” he said as quoted by Reuters. 

He added that Indonesia is also seeking to attract more foreign investment in industrial facilities for its main commodities. He pointed to previous investment in nickel processing and said the government wants to encourage similar projects in palm oil, rubber and silica sand, including processing for solar panels and semiconductor wafers.