US Removes Import Tariffs on Indonesian Crude Palm Oil Under Reciprocal Trade Agreement

Jakarta, February 2026 — The United States government has officially announced the removal of import tariffs on Indonesian Crude Palm Oil (CPO) and its derivatives, setting the tariff rate to 0 percent under a newly signed Reciprocal Tariff Agreement between the two countries. The policy, announced under the administration of President Donald Trump, marks a significant shift in bilateral trade relations and is expected to reshape Indonesia’s palm oil export landscape.

The tariff exemption follows intensive negotiations between Indonesia and the United States, after Indonesia previously faced the risk of reciprocal tariffs starting in August 2025. Through the agreement, Indonesia secured special tariff exemptions for key export commodities, including palm oil, coffee, cocoa, and tea.

As part of the broader commercial and strategic deal, the United States has also requested expanded access to Indonesia’s critical minerals, which are essential for technology and national security industries. Analysts view this as a strategic exchange that strengthens economic ties while balancing geopolitical interests.

Impact on Indonesia’s Palm Oil Industry

Industry stakeholders have welcomed the decision, highlighting several potential impacts:

  • Direct Export Opportunities: Previously, most Indonesian CPO exports to the US—estimated at 3.5 to 4 million tons annually—were routed through European intermediary countries. With zero tariffs, Indonesian exporters now have the opportunity to ship directly to the US market, reducing logistics costs and improving competitiveness.

  • Rising Export Volumes: Market players project a significant increase in export volumes to the United States as Indonesian products become more price-competitive.

  • Improved Farmer Welfare: Higher demand for exports is expected to positively affect Fresh Fruit Bunch (FFB) prices at the farmer level, potentially improving income for palm oil smallholders.

Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that the agreement is mutually beneficial and will not hinder Indonesia’s downstream industrialization policy. The government, he said, will continue to safeguard national strategic interests amid evolving global trade dynamics.

This development is seen as a major milestone for Indonesia’s agricultural exports and could strengthen the country’s position as a leading global palm oil producer in the international market.