U.S.–Indonesia Reciprocal Trade Agreement caps U.S. reciprocal tariffs on Indonesian imports at 19%, removes certain Section 14257/14360 add-ons, and creates a zero-tariff textile mechanism.

REGULATORY BRIEFING – U.S.–INDONESIA AGREEMENT ON RECIPROCAL TRADE

1. What changed

1.1 New bilateral agreement

• The United States and Indonesia concluded the “Agreement Between the United States of America and the Republic of Indonesia on Reciprocal Trade.”
• The Agreement restructures reciprocal tariff treatment between the two countries and links it to broader economic, security, and regulatory commitments.

1.2 U.S. reciprocal tariff framework on Indonesian imports

• The U.S. has been applying additional ad valorem duties on certain imports under:
• Executive Order (EO) 14257 of 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.”
• EO 14360 of November 14, 2025: “Modifying the Scope of the Reciprocal Tariffs With Respect to Certain Agricultural Products.”
• Under the new Agreement (Annex I, Schedule 2 – Schedule of the United States):
• For specified Indonesian-origin goods in Schedule 2A: the U.S. will NOT apply the additional ad valorem rate under EO 14257.
• For specified Indonesian-origin goods in Schedule 2B: the U.S. will apply a reciprocal tariff rate of ZERO (0%) on those originating goods, in accordance with EO 14360.
• For all other originating goods of Indonesia not in Schedules 2A or 2B: the additional ad valorem rate under EO 14257, as amended, is capped at NO HIGHER THAN 19%.
• These reciprocal rates are applied IN ADDITION to the normal MFN rate of duty in the HTSUS.

1.3 Future zero-tariff mechanism for Indonesian textiles/apparel

• Annex III, Article 6.3 (Textiles) commits the U.S. to:
• Establish a mechanism allowing certain textile and apparel goods from Indonesia to receive a ZERO reciprocal tariff rate.
• This mechanism will specify a volume of Indonesian textile/apparel imports that can enter the U.S. at the reduced (zero) reciprocal tariff rate.
• The eligible volume will be determined in relation to the quantity of U.S.-produced textile inputs (e.g., cotton and man-made fiber textile inputs) exported from the U.S. to Indonesia.
• This is a commitment to create a preferential reciprocal-tariff window; operational details (HTS lines, volumes, procedures) are not yet specified in the text and will require subsequent implementation.

2. Affected products

2.1 Indonesian-origin goods subject to reciprocal tariffs

• All “originating goods of Indonesia” imported into the U.S. are potentially affected by the reciprocal tariff framework.
• Categories:
• Schedule 2A: Indonesian-origin goods for which the U.S. will NOT apply the additional ad valorem duty under EO 14257.
• Schedule 2B: Indonesian-origin goods for which the U.S. will apply a reciprocal tariff rate of 0% (in addition to MFN = 0 where applicable, or as a reduction of the reciprocal component only).
• All other Indonesian-origin goods: subject to an additional ad valorem duty under EO 14257, capped at 19%.
• The Agreement text provided does not reproduce the detailed HTSUS line lists for Schedules 2A and 2B; importers must consult the published Schedules on USTR/CBP resources.

2.2 Textiles and apparel from Indonesia

• The Agreement specifically references “textile and apparel goods from Indonesia” that may qualify for a zero reciprocal tariff rate under a future mechanism.
• The mechanism will be linked to U.S. exports of:
• U.S.-produced cotton textile inputs.
• U.S.-produced man-made fiber textile inputs.
• Exact HTS coverage for the zero-reciprocal-tariff textile window is not yet defined; expect coverage in Chapters 52–63 (textiles and apparel) once implementing guidance is issued.

3. Rate changes and structure

3.1 Reciprocal tariff cap and exemptions

• Prior to this Agreement, EO 14257 allowed the U.S. to impose additional ad valorem reciprocal tariffs on imports from certain countries (including Indonesia) at rates that could exceed 19%.
• Under the Agreement (Annex I, Schedule 2, paras. 2–5):
• Schedule 2A goods (Indonesian-origin):
• Old: MFN rate + additional ad valorem reciprocal duty under EO 14257 (rate dependent on product and prior designation).
• New: MFN rate ONLY (no additional EO 14257 reciprocal duty).
• Schedule 2B goods (Indonesian-origin):
• Old: MFN rate + additional ad valorem reciprocal duty under EO 14257 (if applicable).
• New: MFN rate + 0% reciprocal tariff rate (i.e., the EO 14257/14360 reciprocal component is zeroed out for these goods).
• All other Indonesian-origin goods:
• Old: MFN rate + reciprocal duty under EO 14257 (potentially above 19%).
• New: MFN rate + reciprocal duty under EO 14257, but the reciprocal component is capped at a MAXIMUM of 19% ad valorem.

3.2 Combined duty calculation

• For Indonesian-origin goods, the total U.S. duty rate is now structured as:
• Total duty rate = MFN HTSUS rate (column 1 general) + reciprocal component under EO 14257/14360, subject to:
• 0% reciprocal component for Schedule 2B goods.
• 0% reciprocal component for Schedule 2A goods (no EO 14257 add-on).
• ≤19% reciprocal component for all other Indonesian-origin goods.

3.3 Textiles/apparel zero-reciprocal-tariff mechanism

• Once implemented, certain Indonesian textile/apparel imports will:
• Continue to pay the MFN HTSUS rate.
• Have the reciprocal tariff component reduced to 0% for a defined annual volume.
• Above that volume, the reciprocal component may revert to the standard EO 14257 rate (subject to the 19% cap), unless otherwise specified in implementing rules.

4. Dates and timing

4.1 Agreement entry into force

• Article 7.5: The Agreement enters into force 90 days after the date on which the Parties exchange written notifications certifying completion of their applicable legal procedures, or on another date mutually agreed.
• The press release is dated February 19, 2026; the exact date of exchange of notifications is not specified in the provided text.
• Compliance teams must monitor USTR/CBP announcements for:
• The official entry-into-force date.
• The effective date for application of revised reciprocal tariffs and any Chapter 99 or other HTSUS notes implementing the Agreement.

4.2 Implementation and amendments

• Article 7.2: Amendments to the Agreement enter into force 60 days after exchange of notifications, unless otherwise agreed.
• Annex III, Article 6.3 (Textiles) is a commitment to establish a mechanism; operationalization will require:
• Subsequent U.S. regulatory action (likely HTSUS notes and/or Chapter 99 provisions).
• Possible Federal Register notices specifying eligible HTS lines, quota volumes, and administration.

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

5.1 Identify exposure to Indonesian-origin imports

• Compile a list of all HTSUS classifications currently used for Indonesian-origin imports.
• Map these HTS lines against:
• Schedule 2A (no EO 14257 reciprocal duty).
• Schedule 2B (0% reciprocal tariff component).
• All other lines (reciprocal duty capped at 19%).
• Action:
• Obtain the official Schedules 2A and 2B from USTR/CBP once published.
• Update internal tariff databases and ERP systems to reflect the new reciprocal duty treatment by HTS line.

5.2 Recalculate landed cost and pricing

• For goods previously subject to reciprocal tariffs above 19%:
• Recalculate landed cost using the new cap (≤19% reciprocal component + MFN rate).
• Adjust pricing, contracts, and margin analyses accordingly.
• For goods in Schedules 2A and 2B:
• Remove the EO 14257 reciprocal component from cost models (Schedule 2A) or set it to 0% (Schedule 2B).
• Validate that brokers are not continuing to apply outdated reciprocal rates.

5.3 Update broker instructions and entry processes

• Provide written instructions to customs brokers to:
• Apply the correct combined MFN + reciprocal rate for Indonesian-origin goods based on updated guidance.
• Use any new Chapter 99 or special program indicators that CBP may introduce to claim the revised reciprocal treatment.
• Ensure origin documentation supports “originating goods of Indonesia” status where required to access the revised reciprocal rates.

5.4 Prepare for textile/apparel zero-reciprocal-tariff mechanism

• For importers of Indonesian textiles/apparel:
• Monitor for U.S. implementing measures specifying:
• Eligible HTSUS lines.
• Annual volume thresholds tied to U.S. textile input exports.
• Any licensing, allocation, or first-come-first-served procedures.
• Coordinate with suppliers and internal sourcing teams to:
• Plan shipments to maximize use of the zero-reciprocal-tariff window once available.
• Track utilization of any quota/volume limits.

5.5 Monitor for HTSUS and Chapter 99 changes

• Expect:
• Amendments to the HTSUS (possibly via Presidential Proclamation or Federal Register notice) to implement:
• Removal or reduction of EO 14257 reciprocal duties for Schedules 2A and 2B.
• The 19% cap for other Indonesian-origin goods.
• Any special provisions for the textile/apparel mechanism.
• Compliance teams should:
• Subscribe to CBP CSMS and Federal Register notifications.
• Update internal classification and duty-rate tools promptly upon publication.

5.6 Contract and supply chain review

• For long-term contracts involving Indonesian-origin goods:
• Review duty clauses to ensure that tariff savings (from removal or reduction of reciprocal duties) are appropriately allocated.
• Consider renegotiation where the Agreement materially changes landed cost.
• For sourcing decisions:
• Reassess competitiveness of Indonesian-origin products versus other origins in light of the 19% cap and any zero-reciprocal-tariff opportunities.

6. References and source documents

6.1 Agreement text

• Full Agreement PDF (USTR):
• 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

6.2 Key U.S. 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.

6.3 Expected implementing resources

• Harmonized Tariff Schedule of the United States (HTSUS):
• https://hts.usitc.gov
• U.S. Customs and Border Protection (CBP) – Cargo Systems Messaging Service (CSMS):
• https://www.cbp.gov/trade/automated/cargo-systems-messaging-service
• Federal Register (for proclamations and implementing notices):
• https://www.federalregister.gov

7. Points to monitor going forward

• Official entry-into-force date of the Agreement and corresponding effective date for revised reciprocal tariffs.
• Publication of Schedules 2A and 2B with specific HTSUS lines and confirmation of which Indonesian-origin products are exempt from or receive zero reciprocal tariffs.
• Any CBP guidance on:
• Claiming the revised reciprocal treatment (e.g., special program indicators, Chapter 99 numbers).
• Documentation requirements to substantiate Indonesian origin.
• Detailed implementation of the textile/apparel zero-reciprocal-tariff mechanism, including:
• Annual volume limits.
• Administration method (quota, TRQ, or other).
• Any subsequent amendments or modifications to EO 14257/14360 or related HTSUS notes that further adjust reciprocal tariff treatment for Indonesian-origin imports.