Indonesia Agrees to Step Up Energy Imports to Avoid Tariffs

Indonesia has become the latest country to agree to boost imports of U.S. goods to avoid crippling tariffs for its exports.

The country plans to increase its imports from the United States by $19 billion, including energy and food, the chief economic minister in Jakarta, Airlangga Hartarto told media, as quoted by Reuters.

Indonesia’s government had earlier this week floated a plan to boost U.S. energy imports to $10 billion. Now, this has been confirmed as part of negotiations that took place in Washington and that will see the Asian nation avoid tariffs of 32% on its exports to the United States.

“Indonesia also plans to buy agricultural products including wheat, soybeans, and soybean meal, and increase purchases of capital goods from the U.S,” Hartarto said.

Indonesia imports both oil and gas from the United States and will have to reduce its imports from other suppliers in order to fulfil its commitment to boosting U.S. imports. Reuters cited Kpler data showing that imports of crude oil, as of last year, averaged a little over 300,000 barrels daily, coming mostly from Nigeria, Saudi Arabia, and Angola. The U.S. share in that total was a modest 13,000 barrels daily.

Indonesia also imported some 217,000 barrels daily of liquefied petroleum gas last year, of which a sizable 124,000 barrels daily came from the United States. Qatar, the UAE, and Saudi Arabia were minor suppliers of LPG to Indonesia.

According to one think tank in Indonesia, the country may have to reduce its LPG imports from the Middle East by between 20% and 30% in order to fulfil its commitment to the administration in Washington. The fuel is considered key for Jakarta’s success in avoiding the 32% tariff threat for its exports that have put it in a position of a trade surplus with the United States.

By Irina Slav for Oilprice.com

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