The United States and Indonesia have finalized a landmark trade agreement that is expected to significantly expand market access for American exporters — including the dairy industry — by eliminating a wide range of trade barriers. Announced on July 22, 2025, by President Donald J. Trump, the U.S.-Indonesia Agreement on Reciprocal Trade is positioned to be one of the most impactful deals for U.S. agriculture and dairy in recent years.
Key Wins for U.S. Dairy
The deal eliminates tariff barriers on over 99% of U.S. exports to Indonesia, including dairy products. This gives American dairy producers an unprecedented opportunity to access a market of more than 270 million people, many of whom are increasingly incorporating dairy into their diets.
In addition to tariff elimination, the agreement addresses several non-tariff barriers that previously limited U.S. dairy exports:
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Import licensing exemptions: U.S. dairy products are now exempt from Indonesia’s restrictive import licensing systems, including the commodity balance policy.
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Facility recognition: All U.S. dairy facilities will be officially listed and recognized by Indonesian authorities, streamlining export approvals.
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Regulatory alignment: Indonesia will accept U.S. regulatory oversight and documentation, reducing delays caused by duplicative inspections and certification processes.
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Fair labeling practices: The deal ensures transparency on geographical indications (GIs), helping U.S. cheeses avoid unfair exclusion based on naming disputes.
Leveling the Playing Field
Previously, Indonesia maintained a simple average applied tariff of 8% on U.S. goods, compared to the U.S. average of 3.3%. Under the new agreement, Indonesia will pay a reciprocal tariff rate of 19%, helping to rebalance trade terms. In 2024, the U.S. goods trade deficit with Indonesia stood at $17.9 billion — the 15th largest. This new agreement aims to shrink that gap by boosting high-quality American exports, including dairy.
What’s Next
The deal will be formally memorialized in the coming weeks, locking in the gains for American farmers, exporters, and manufacturers. For U.S. dairy producers, this agreement represents a major step forward in overcoming long-standing trade barriers and competing more effectively in Southeast Asia.
Broader Implications
Beyond agriculture, the agreement includes provisions for digital trade, regulatory cooperation, labor standards, and critical minerals. It also signals stronger bilateral cooperation on economic security and supply chain resilience.
As the U.S. dairy sector seeks new markets and more predictable trade environments, this deal with Indonesia offers both — and potentially sets the stage for similar agreements with other emerging economies.
