It’s been a wild ride. Honestly, if you told a trade analyst back in 2024 that Indonesia would be the first major Southeast Asian power to crack the code on "Trump 2.0," they probably would’ve laughed you out of the room. But here we are in January 2026, and the relationship between Donald Trump and Indonesian President Prabowo Subianto has basically rewritten the playbook for how mid-sized powers deal with a protectionist Washington.
They aren't exactly "besties," but there’s a weird, mutual respect there. It’s transactional. It’s blunt. And it’s working—sorta.
The Viral Call That Started It All
You probably remember that video. Late 2024. Prabowo is sitting in a room, phone to his ear, speaking to a newly elected Trump. He’s congratulating him, and Trump—in typical fashion—is showering him with praise, calling him a "respected person" and telling him he's doing an "incredible job."
That wasn't just world leaders being polite. It was the foundation of what’s now being called the "New Era" of US-Indonesia ties. Prabowo, a former special forces general with his own "strongman" reputation, speaks Trump’s language. He doesn't lead with lectures on human rights or carbon credits; he leads with deals.
When they spoke again in June 2025, the tone had shifted from "nice to meet you" to "how much are you buying?"
The 19 Percent "Fence": Cutting the Tariff Deal
By mid-2025, the "Liberation Day" tariffs had everyone in Jakarta panicking. Trump had threatened a massive 32% reciprocal tariff on Indonesian goods to close the $18 billion trade deficit. For an economy that relies heavily on exporting apparel, electrical equipment, and palm oil to the States, that was a potential death blow.
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But Prabowo didn't blink. He sent his top negotiator, Airlangga Hartarto, to Washington with a suitcase full of concessions.
The deal they struck in July 2025 was historic, if a bit lopsided. Trump agreed to lower the "fence" from 32% down to 19% for Indonesian imports. In exchange? Indonesia had to open its doors wide.
- The Big Buys: Jakarta committed to $15 billion in US oil and gas, $4.5 billion in agricultural products (mostly soybeans and dairy), and a massive order of 50 Boeing aircraft.
- Market Access: Trump claimed the deal "opens up Indonesia's entire market for the first time in history." This meant zero tariffs for US goods entering Indonesia.
- The Catch: While US exporters pay nothing, Indonesian exporters still pay that 19%.
It’s a classic "America First" victory. Trump gets to brag about shrinking the deficit and selling planes, while Prabowo keeps the US market accessible enough to prevent an industrial collapse at home.
Nickel, China, and the High-Stakes Gamble
There’s a massive elephant in the room: Nickel.
Indonesia has the world's largest reserves. They want to be the global hub for EV batteries. The problem? Most of their smelters are funded by Chinese money. For the Trump administration, that’s a red flag.
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The US has been leaning on Prabowo to join the Global Forum on Steel Excess Capacity and to lift bans on raw mineral exports. Essentially, Washington wants Indonesian nickel for American factories, but they don't want to fund China's "Belt and Road" projects in the process.
Why the Nickel Deal is Stuck
- Downstreaming: Prabowo is obsessed with "downstreaming"—processing minerals at home to create jobs.
- US Pressure: Trump wants raw minerals shipped to the US to be processed there ("Made in America").
- The China Factor: If Prabowo pivots too hard toward the US, he risks a trade war with Beijing, his biggest investor.
Peace in the Middle East?
Surprisingly, it's not all about money. In October 2025, at the ASEAN–United States Summit in Malaysia, Trump went off-script to praise his "new friend" Prabowo for his help in Middle East peace efforts, specifically regarding Gaza.
Prabowo has been positioning Indonesia as a mediator, and Trump—who is always looking for a "deal of the century" legacy—seems to appreciate having a partner in the world's most populous Muslim-majority nation. It gives Prabowo a level of diplomatic cover that other regional leaders just don't have.
What Most People Get Wrong
People think Prabowo is just rolling over for Trump. That’s not quite right.
If you look at the "Agreement on Reciprocal Trade" (scheduled for a final signing in late January 2026), Jakarta is fighting tooth and nail for zero tariffs on palm oil. They’re arguing that since palm oil can’t grow in the US, it doesn't compete with American farmers. It’s a smart, technical play.
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Also, despite the close ties with Trump, Prabowo hasn't abandoned his "non-aligned" stance. He’s still buying from China, still talking to Russia, and still keeping the US at arm's length when it comes to hard military alliances.
Actionable Insights: Navigating the 2026 Landscape
If you're doing business between these two countries or just watching the markets, here is what you need to know:
- Watch the January 2026 Signing: The final legal "scrubbing" of the trade deal happens this month. This will set the tariff rates for the next four years.
- Monitor Palm Oil Negotations: If Indonesia secures a zero-tariff exemption for palm oil, it’s a massive win for their agricultural sector and a sign that Trump is willing to make exceptions for commodities that don't hurt his base.
- The Boeing Ripple Effect: With 50 new Boeing jets (mostly 777s) coming to Indonesia, expect a major expansion in Garuda Indonesia or Lion Air’s long-haul capabilities.
- Critical Minerals are the Real Prize: The "nickel-for-market-access" trade-off is the next big battle. Keep an eye on whether US mining giants like Freeport-McMoRan get expanded permits in Indonesia as part of a side deal.
The relationship between Donald Trump and Prabowo Subianto is built on a shared "strongman" DNA and a very cold, hard calculation of national interest. It’s not always pretty, and it’s definitely not "free trade" in the old sense, but for now, it's the only game in town.
Next Steps for Staying Ahead:
- Monitor official announcements from the Indonesian Ministry of Trade regarding the final text of the Reciprocal Trade Agreement.
- Track US Treasury reports on the trade deficit with Indonesia to see if the $22 billion purchase commitment actually moves the needle for the Trump administration.