US and Indonesia Advance Talks on Critical Minerals Trade, Targeting Lower Tariffs and Greater Oversight

Jul 25, 2025

US and Indonesia Advance Talks on Critical Minerals Trade, Targeting Lower Tariffs and Greater Oversight

The United States and Indonesia are advancing discussions to jointly monitor and manage the trade of critical minerals, recognizing both the economic and strategic significance of these resources in the modern global supply chain. Indonesian Chief Economic Minister Airlangga Hartarto provided new details this week about the ongoing negotiations, which are aimed at ensuring transparent trade management and preventing misuse of these vital commodities.

According to Minister Hartarto, Indonesia—an island nation and the largest economy in Southeast Asia—has vast reserves of critical minerals, including nickel, tin, copper, bauxite, and rare earth elements. The minister emphasized that joint trade oversight is necessary not only to regulate imports and exports of these strategically valuable materials, but also to ensure they do not fall into the hands of malign actors or groups with terrorist intent. Elements like nickel and rare earths are essential for sectors such as artificial intelligence infrastructure, data centers, aviation, and the space industry.

Negotiations between the two countries have led to a notable reduction in U.S. tariffs on select Indonesian goods—from 32% down to 19%—ahead of an August 1 deadline, with the possibility of further reductions, potentially to nearly zero, for products unavailable domestically in the United States. These talks also include establishing clear rules of origin and restrictions on the role of third-party vendors to ensure benefits accrue to eligible exporters. Further details can be found in recent reports from Yahoo Finance and Reuters.

Despite Indonesia’s mineral wealth, the processing industry for nickel and bauxite—two key ingredients for batteries and electronics—is currently dominated by Chinese companies. This has fueled concerns among U.S. lawmakers regarding the influence of China on Indonesia’s mineral sector, as well as broader questions about labor and environmental standards in the country's mining industry. Some U.S. senators have urged caution regarding the scope and structure of any minerals agreement, highlighting the risks associated with insufficient oversight.

In response, Indonesia has initiated a series of reforms aimed at bolstering transparency and sustainability. The government plans to introduce a new system for nickel tracing, utilizing the SIMBARA portal to track every ton of nickel ore sold. Top local producers are being encouraged to pursue certification through global standards, such as those set by The Initiative for Responsible Mining Assurance, as part of efforts to improve environmental and operational practices. A more detailed look at these reforms was recently reported by Bloomberg.

The United States has also formally invited Indonesia to participate in the Mineral Security Partnership (MSP), a bloc formed by 14 countries and the European Union that seeks to promote sustainable, traceable critical minerals supply chains and to support those efforts through financial and diplomatic initiatives. Proponents of the partnership say it would signal a new commitment to responsible practices and bring new opportunities for investment into Indonesia’s resource sector. More information about the MSP invitation was covered by Mining.com.

While the two governments continue working through the specifics—such as the depth of monitoring, rules of origin, and oversight requirements—both sides have framed these talks as evidence of a maturing partnership. The outcomes of these negotiations are expected to hold significant implications for global supply chains of batteries, renewable energy, and advanced digital infrastructure.