Nearly ten years of negotiations between the EU and Indonesia were accelerated by the threat of former US President Donald Trump’s aggressive tariff measures, resulting in a free trade deal that will eliminate most tariffs between the two regions.
Indonesia and the European Union (EU) have finalised a free trade agreement (Comprehensive Economic Partnership Agreement, CEPA) after nine years of negotiations on 23 September 2025.
The free trade agreement is aimed at boosting exports, investment, and countering the effects of US tariffs under President Donald Trump.
The deal will eliminate import duties on over 90% of products, with most taking effect immediately and others, like Indonesia’s 50% tariff on EU cars, being phased out over five years.
Indonesia anticipates that bilateral trade, valued at USD 30.1 billion in 2024, will double within five years of the agreement’s implementation.
The EU, seeking to reduce reliance on China and mitigate the impact of US tariffs, has been actively pursuing trade deals with other regions, including Mercosur, Mexico, and India.
European Commission President, Ursula von der Leyen, said: “We have made a commitment to double down on diversification and partnerships, to further support EU jobs and boost growth. Our deal with Indonesia creates new opportunities for businesses and farmers in a major and growing economy. This also provides us with a stable and predictable supply of critical raw materials, essential for Europe’s clean tech and steel industry.”
The EU expects its exporters to save EUR 600 million (USD 707.4 million) in Indonesian duties, with increased sales of chemicals, machinery, automobiles, and food products like milk powder and cheese. Meanwhile, Indonesia aims to boost exports of palm oil, coffee, textiles, and other goods, with plans for the agreement to take effect by 1 January 2027.
Indonesia’s Economic Affairs Minister, Airlangga Hartarto, highlighted opportunities for closer supply chains in critical minerals, renewable energy, and innovation. Indonesia is a world-leading producer of raw materials, many of which are vital to the green and digital sectors. The deal strengthens predictable, reliable and sustainable supply chains, including through reduced tariffs, facilitation of exports, environmental impact assessments, and advanced cooperation.
He also noted ongoing discussions with EU automakers about partnerships in battery and electric vehicle production in Indonesia.
Next steps
The negotiated draft texts will be published shortly. These texts will go through legal revision and translation into all official EU languages. The European Commission will then put forward its proposal to the Council for the signature and conclusion of the CEPA. Once adopted by the Council, the EU and Indonesia can sign the agreements.
Following the signature, the texts will be transmitted to the European Parliament for consent. After the consent by the European Parliament, and once Indonesia also ratifies them, the CEPA can enter into force.
