New US–Indonesia Reciprocal Trade Agreement revises US reciprocal tariffs on Indonesian goods and creates a special zero‑tariff mechanism for certain Indonesian textiles/apparel.

REGULATORY BRIEFING – US–INDONESIA AGREEMENT ON RECIPROCAL TRADE

1. What changed

• The United States and Indonesia concluded an Agreement on Reciprocal Trade.
• For US imports from Indonesia, the Agreement:

– Revises how the United States applies its reciprocal tariff on originating Indonesian goods, via a dedicated US tariff schedule (Schedule 2).

– Exempts certain originating Indonesian goods from the additional reciprocal tariff established under Executive Order (EO) 14257 of April 2, 2025.

– Grants a reciprocal tariff rate of zero on specified originating Indonesian agricultural products under EO 14360 of November 14, 2025.

– Caps the additional reciprocal tariff on all other originating Indonesian goods at 19% ad valorem, in addition to the normal MFN rate.

– Commits the United States to establish a mechanism under which certain Indonesian textile and apparel goods can receive a zero reciprocal tariff rate, subject to volume limits linked to US textile input exports.

These changes directly affect duty calculations on US imports of Indonesian-origin goods once the Agreement enters into force and implementing modifications to the HTSUS/Chapter 99 are issued.

2. Affected products and HTS coverage

The Agreement uses the Harmonized Tariff Schedule of the United States (HTSUS) as the base nomenclature for US measures (Schedule 2). Key affected categories:

• All “originating goods of Indonesia” as defined in the Agreement (rules of origin to be established if benefits accrue substantially to third countries).
• Goods listed in:

– Schedule 2A: Indonesian-origin goods for which the United States will NOT apply the additional ad valorem reciprocal tariff under EO 14257 (specific HTS lines will be in that schedule – not reproduced in the excerpt, but importers should expect a defined list of HTSUS subheadings).

– Schedule 2B: Indonesian-origin goods that will receive a reciprocal tariff rate of zero under EO 14360 (certain agricultural products – again, specific HTSUS lines will be in Schedule 2B).

• All other originating Indonesian goods not in Schedules 2A or 2B remain subject to an additional reciprocal tariff (capped at 19%) on top of the MFN rate.
• Textiles and apparel: Article 6.3 commits the United States to create a mechanism allowing “certain textile and apparel goods from Indonesia” to receive a zero reciprocal tariff rate. The volume of qualifying imports will be tied to the quantity of US exports of textile inputs (e.g., US‑produced cotton and man‑made fiber textile inputs). Specific HTS lines and volumes will be defined in future implementing measures.

Note: The Agreement text does not list the exact HTSUS codes for Schedules 2A and 2B or the textile mechanism; these will be critical for operational implementation and will appear in the published US tariff schedule/Chapter 99 notes or Federal Register notices.

3. Rate changes and tariff structure

The Agreement interacts with two key Executive Orders governing reciprocal tariffs:

• EO 14257 (April 2, 2025): Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.

– Establishes an additional ad valorem reciprocal tariff on certain imports, including from Indonesia.

• EO 14360 (November 14, 2025): Modifying the Scope of the Reciprocal Tariffs With Respect to Certain Agricultural Products.

– Provides for a reciprocal tariff rate of zero on certain agricultural products.

Under the Agreement (Schedule 2 – General Notes):

1) Goods in Schedule 2A (originating Indonesian goods):

• Change: The United States shall not apply the additional ad valorem rate of duty from EO 14257 to these goods.
• Resulting rate: Normal MFN HTSUS rate only (no reciprocal surcharge).
• Numerical detail: The Agreement does not specify the prior EO 14257 rate by percentage for these lines, but it removes that additional rate entirely for Schedule 2A goods.

2) Goods in Schedule 2B (originating Indonesian agricultural goods):

• Change: The United States shall provide a reciprocal tariff rate of zero on these goods, in accordance with EO 14360.
• Resulting rate: Reciprocal tariff component = 0%. The MFN base rate may still apply unless separately reduced; the Agreement clarifies that the reciprocal rate is applied “in addition to” MFN, but for Schedule 2B that reciprocal component is zero.

3) All other originating Indonesian goods (not in 2A or 2B):

• Change: The additional ad valorem reciprocal tariff under EO 14257, as amended, is capped.
• Resulting rate: Additional reciprocal tariff = up to 19% ad valorem maximum, plus the MFN rate.
• Numerical detail: “Shall be no higher than 19 percent.” If EO 14257 previously imposed a higher reciprocal rate on any Indonesian-origin line, this Agreement reduces that additional component to a maximum of 19%.

4) Layering with MFN:

• The Agreement explicitly states that the United States shall apply the rates in paragraphs 2, 3, and 4 “in addition to the United States’ MFN rate of duty in effect.”
• Practically, total duty on an affected Indonesian-origin line = MFN HTSUS rate + applicable reciprocal tariff (0%, capped 19%, or none, depending on schedule).

5) Future textile/apparel mechanism (Article 6.3):

• The United States commits to establish a mechanism allowing “certain textile and apparel goods from Indonesia to receive a zero reciprocal tariff rate.”
• The mechanism will:

– Set a to‑be‑specified volume of Indonesian textile/apparel imports eligible for the zero reciprocal tariff rate.

– Link that volume to the quantity of US exports of textiles (e.g., US‑produced cotton and man‑made fiber textile inputs) to Indonesia.

• Numerical detail: No specific volumes or percentages are yet defined; these will be set in implementing regulations or a subsequent schedule.

4. Dates and timing

• Entry into force of the Agreement:

– Article 7.5: The Agreement enters into force 90 days after the Parties exchange written notifications certifying completion of their applicable legal procedures, or another date agreed by the Parties.

– Until that date, existing EO 14257/14360 measures remain in effect as currently implemented.

• Application of revised US reciprocal tariffs:

– The revised treatment (no EO 14257 additional duty for Schedule 2A, zero reciprocal rate for Schedule 2B, 19% cap for others) will apply as of the Agreement’s entry into force, subject to US implementing actions (likely HTSUS/Chapter 99 amendments and CBP guidance).

• Textile/apparel zero‑tariff mechanism:

– No specific effective date is given; the United States “commits to establish a mechanism.” Importers should expect a later regulatory action or Federal Register notice specifying start date, eligible HTS lines, and annual volumes.

• Termination/reversion risk:

– Article 7.4: Either Party may terminate the Agreement with 30 days’ written notice.

– Article 5.3(3): If Indonesia enters into a new bilateral FTA or preferential economic agreement with a country that “jeopardizes essential US interests” and consultations fail, the United States may terminate this Agreement and “reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025.”

– Compliance teams should monitor for any termination or suspension announcements, as reciprocal tariffs could revert to pre‑Agreement EO 14257 levels.

5. Required actions for importers, brokers, and compliance teams

A. Classification and origin

1) Confirm HTSUS classification:

• Review all Indonesian-origin product lines to ensure correct HTSUS classification, as eligibility for Schedules 2A/2B and any future textile mechanism will be HTS‑specific.

2) Confirm “originating” status under the Agreement:

• The Agreement intends benefits to accrue “substantially” to the Parties and allows the United States to establish rules of origin if benefits accrue to third countries.
• Once rules of origin are published, ensure suppliers in Indonesia can document origin (e.g., bills of materials, production records) to support any preferential or reciprocal treatment.

B. Tariff and duty calculation updates

3) Identify goods in Schedules 2A and 2B:

• As soon as USTR/CBP publish the detailed US tariff schedules (including Schedules 2A and 2B), map your Indonesian-origin SKUs to those HTS lines.
• For Schedule 2A goods:

– Remove the EO 14257 additional reciprocal duty from landed cost calculations as of the effective date.

• For Schedule 2B goods:

– Ensure the reciprocal tariff component is set to 0% in your systems; confirm whether any separate MFN reductions are implemented.

4) For all other Indonesian-origin goods:

• Confirm the applicable reciprocal tariff rate under EO 14257 as amended by the Agreement, ensuring it does not exceed 19%.
• Update internal duty matrices and landed cost tools to reflect MFN + capped reciprocal rate.

5) Monitor for HTSUS/Chapter 99 changes:

• Expect implementing modifications to the HTSUS, likely including:

– New or revised Chapter 99 provisions referencing EO 14257/14360 and the Agreement.

– Specific annotations for Indonesian-origin goods in Schedules 2A/2B.

• Brokers should update ABI/ACE programming to capture any new Chapter 99 numbers or special program indicators.

C. Textile and apparel planning

6) Prepare for the zero‑reciprocal‑tariff textile mechanism:

• If you import Indonesian textiles/apparel:

– Track your HTS lines and volumes from Indonesia.

– Track your company’s or group’s exports of US textile inputs (e.g., HS 52 (cotton), man‑made fiber yarns/fabrics) to Indonesia, as these will influence the quota volume.

• Once the mechanism is published:

– Apply for any quota allocations or first‑come‑first‑served access as required.

– Ensure brokers use the correct HTS/Chapter 99 combinations to claim the zero reciprocal tariff rate.

D. Risk management and contracts

7) Contractual pricing and duty clauses:

• For long‑term contracts involving Indonesian-origin goods, include clauses addressing:

– Changes in reciprocal tariff rates (e.g., removal for Schedule 2A, zero rate for 2B, 19% cap).

– Potential reversion to higher EO 14257 rates if the Agreement is terminated.

8) Supply chain monitoring:

• Monitor for any US determinations that benefits are accruing to third countries, which could trigger stricter rules of origin and affect eligibility.

E. Internal controls and documentation

9) Update SOPs and training:

• Update internal import compliance manuals to reflect:

– New treatment of Indonesian-origin goods under EO 14257/14360.

– Need to check Schedules 2A/2B and any textile mechanism before applying reciprocal tariffs.

• Train customs and logistics staff on:

– Identifying Indonesian-origin goods.

– Applying the correct duty rates and any Chapter 99 provisions.

10) Recordkeeping:

• Maintain documentation supporting origin and classification for all Indonesian-origin entries benefiting from reduced or zero reciprocal tariffs, in line with CBP recordkeeping requirements (19 CFR Part 163).

6. References and source documents

Primary Agreement and related documents (USTR):

• Full Agreement text (PDF – sanitized public version):

https://ustr.gov/sites/default/files/files/Press/Releases/2026/02.19.26%20US-IDN%20ART%20Full%20Agreement%20-%20US%20Final%20for%20Website%20sanitized.pdf

• USTR press release and links to:

– Agreement text

– Tariff schedule

– Implementation document

– Fact sheet

(Access via USTR homepage: https://ustr.gov – search “United States–Indonesia Agreement on Reciprocal Trade”).

Key US legal instruments referenced:

• Executive Order 14257 (April 2, 2025): Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.
• Executive Order 14360 (November 14, 2025): Modifying the Scope of the Reciprocal Tariffs With Respect to Certain Agricultural Products.

Next steps for compliance teams:

• Monitor the Federal Register and CBP/CSMS messages for:

– Publication of Schedules 2A and 2B with specific HTSUS lines.

– Any new Chapter 99 provisions or special program indicators for Indonesian-origin goods.

– Details and start date of the textile/apparel zero‑reciprocal‑tariff mechanism.

• Once published, immediately update classification/duty matrices and broker instructions to ensure correct duty assessment on all Indonesian-origin imports.