EU and Indonesia Conclude Trade Agreement Following Ten Years of Discussions

The European Union continues to seek new partners to circumvent Donald Trump’s trade war. On Tuesday, Brussels closed a deal with Indonesia after nine years of talks aimed at boosting exports and investment to offset the impact of the U.S. president’s tariffs.

Both parties will eliminate more than 90% of the tariffs, the vast majority of them as soon as the agreement is implemented, foreseeably on January 1st, 2027. Thus, the EU expects the alliance to offset the American impact, which also applies a 19% tariff on Indonesian products. In addition, the intention is also to promote a reduction in its dependence on China.

The EU claims that its exporters will save €600 million in tariffs by selling their products on the Indonesian market. Thus, it plans to increase sales of chemicals, machinery, automobiles and food products. Indonesia, on the other hand, expects to boost its exports of palm oil, coffee and textiles, among others.

The EU expects its exporters to save €600 million by selling their products in Indonesia

In the coming months, the agreement will have to undergo legal processes and approvals, as well as be translated into the EU’s official languages. It will then be formally approved by the EU governments and the European Parliament. The European Union is continuing its efforts to forge new trade alliances, including in South America and India.

Indonesia has a population of 283 million people. In 2024 it bought European products worth €9.7 billion, while EU companies invested €25.1 billion in 2023. In 2024, the EU was Indonesia’s fifth largest trading partner, while Indonesia ranked 33rd for the EU.

EU Trade Commissioner Maros Sefcovic said in Bali that the agreement will boost investment by European companies in Indonesia and would improve the bloc’s access to minerals essential to its cleantech and steel industries, such as nickel, copper, bauxite and tin.