Trump Reveals Indonesia Tariff Rate; EU Prepares Retaliatory Tariffs

The European Union has also sought relief for sectors such as the automotive industry, which now faces 25% U.S. tariffs. (AP Photo/Koji Sasahara)

President Donald Trump said the U.S. will impose a 19% tariff on goods imported to the U.S. from Indonesia, the lowest rate he has set for imports in a flurry of announcements in recent days.

“They are going to pay 19%, and we are going to pay nothing,” President Donald Trump told reporters Tuesday. He added that the U.S. would have full access to Indonesia’s markets, “which we’ve never had.”

Earlier Tuesday, Trump said that he had spoken directly with Indonesian president Prabowo Subianto and made a “great deal.”

The announcement follows a flurry of tariff letters sent to U.S. trade partners last week with rates ranging from 25% to 50% effective Aug. 1. Trump has said he considers each letter to be a deal, even if he is unilaterally setting the terms.

His earlier post didn’t specify if he would be sending a similar letter to Indonesia’s president, though in a subsequent social media post, he used language that is similar to the formal letters issued last week to other countries.

Indonesia has committed to purchasing $15 billion in U.S. energy, Trump said in a social media post, plus $4.5 billion of American agricultural products, and 50 Boeing jets, many of them 777s. Transshipments from countries whose imports are subject to higher U.S. tariffs would carry the higher tariff on top, Trump said.

EU Could Retaliate With Tariffs on Boeing and Bourbon if a Trade Deal Isn’t Reached

The European Union could target Boeing and whiskey-maker Brown-Forman under its plans for retaliatory tariffs if the bloc can’t reach a trade deal with the U.S.

EU officials on Monday presented a list to member states of American products to hit with levies if an agreement isn’t reached by Trump’s Aug. 1 deadline, The Wall Street Journal reported. Trump has threatened to impose 30% blanket tariffs on European imports if no deal is reached.

The list covers about $77 billion worth of industrial imports, including aircraft, machinery, automotive products, chemicals, plastics, medical devices, and around $7 billion worth of agricultural and food products, such as fruits and vegetables, wine, beer, and spirits, according to the report from the Journal.

“This decision threatens to undo the hard-won progress made by American distillers and will be a crushing blow to the recovery of U.S. spirits exports to the EU,” said Chris Swonger, chief executive of liquor trade group Distilled Spirits Council of the United States. “We need President Trump’s leadership to negotiate a deal with the EU to return to the zero-for-zero tariff framework that has proven beneficial for the U.S. spirits and hospitality sectors.”

While Trump’s tariff threat and the EU’s list raise the stakes for negotiations, the market assumption is that a deal will be reached, with the Journal reporting that it might involve accepting a 10% tariff on most European exports to the U.S.

“Our base case is for additional trade deals to emerge before the new 1 August deadline and for the U.S. effective tariff rate to settle at around 15%. Such a backdrop would allow risk assets to move higher over the next 12 months amid a resilient economy,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management, in a research note on Tuesday.

China Curbs EV Battery Technology Exports

China on Tuesday introduced new export licensing requirements for crucial manufacturing technologies in the electric-vehicle battery industry.

China’s commerce ministry said the government is restricting exports of technology used in battery cathode materials production and nonferrous metal refinery or processing. Exports will now require approvals from Chinese authorities.

The new restrictions were first proposed in January and come after Beijing tightened its controls over rare-earth exports in recent years.

Write to Anita Hamilton at anita.hamilton@barrons.com and Adam Clark at adam.clark@barrons.com