JakartaGlobe-July 27
Indonesia is in talks with the US to have its palm oil exempted from the latest tariff measure, according to Jakarta’s chief negotiator.
US President Donald Trump recently introduced a fresh round of tariffs over concerns that countries are letting goods made with forced labor pass their borders. Indonesia gets the lower tier of the regime at 10%. Asked whether Jakarta’s palm oil would enjoy zero tariff access, senior economic minister Airlangga Hartarto said Monday that negotiations for such special treatment were underway.
“We are in the process of asking the US to free our palm oil from the tariffs,” Airlangga told reporters in Jakarta.
“[We have requested] such [0%] treatment for many other commodities, particularly our natural resources.”
Airlangga went on to say that Jakarta is still waiting for the results of the other US investigation that zeroed in on overproduction in Indonesia’s manufacturing sector, something that can lead to more tariff measures.
“The probe on this structural excess capacity is still ongoing, but we have already given our response [to the US].”
The US trade representative’s office had said that product exemptions would be “appropriate” for foreign products that American businesses can’t produce domestically. The office’s notice shows that Indonesian palm oil, be it crude or refined, would be eligible for this exemption, as does agar-agar.
Indonesia controls 89% of the American palm oil market share, seconded by Malaysia. Annual US-bound palm oil shipments can hit the 2-million-ton mark, according to producers group Gapki.
When Indonesia unveiled its US trade deal in February, Airlangga confirmed that Indonesian palm oil would get tariff exemptions. This hard-fought agreement was originally a response to Trump’s initial 32% tariff threat that he had launched last year.
Under the new trade measure, the 10% duties will apply for countries that have adopted or committed to forced-labor import prohibitions. The world’s largest palm oil producers, Indonesia and Malaysia, are on this category. Its less-compliant neighbors Singapore and Vietnam get hit by a 12.5% tariff.
The forced-labor levy officially took effect on Friday, replacing the 10% baseline stopgap tariffs that had come to an end at that exact same moment. The expired duties were a replacement for the reciprocal tariffs that the Supreme Court had struck down in February, sparking assumptions that this is all part of Trump’s plan to rebuild his tariff wall.
US Trade Representative Jamieson Greer had defended Trump’s tariff policy, saying that Washington had long “rigorously enforced” a forced labor import ban.
“It’s well past time for our trading partners to do the same,” Greer said.
