Indonesia seeks US palm oil exemption from 10% forced-labor-related tariff
Indonesia is lobbying the United States to exempt palm oil from an additional 10% tariff imposed after a USTR investigation into forced-labor practices. Jakarta says its request remains under review while a separate US investigation into excess production capacity is still pending.
Exemption request remains under review
Indonesia is continuing negotiations with the United States over an exemption for palm oil from an additional 10% tariff, according to Liputan6.com. The measure applies to products from Indonesia following an investigation by the Office of the United States Trade Representative into goods made using forced labor.
Coordinating Minister for Economic Affairs Airlangga Hartarto said on July 28, 2026, that the US authorities were processing Indonesia’s request in stages. Jakarta is arguing that palm oil should be excluded because Indonesia was assessed as relatively compliant with rules prohibiting forced labor compared with several other countries examined by USTR.
The tariff resulted from a Section 301 investigation under the Trade Act of 1974. USTR examined labor practices in 60 countries and territories. Indonesia is now among 17 countries and territories whose products face the additional 10% duty, Liputan6.com reported.
Seventeen suppliers face the additional duty
The other affected economies listed in the report are Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom. The broad country coverage means Indonesian palm oil suppliers are not the only exporters exposed to the new trade measure, although the commercial effect will vary by product and each supplier’s position in the US market.
Airlangga said Indonesia had initially been part of a group of six among the 60 economies examined, but the latest calculation expanded that group to 17. He also said countries considered less compliant or not yet compliant were assigned a 12.5% tariff. Liputan6.com did not provide further details about which countries or products fall under that higher rate.
For Indonesian producers, processors and traders, the central issue is whether palm oil will remain subject to the 10% additional cost at the US border. An exemption would preserve more favorable access for one of Indonesia’s principal export commodities. If the request is rejected, exporters and US buyers would have to determine how the added duty is divided between supplier margins and customer prices.
Separate excess-capacity inquiry continues
The tariff negotiations are proceeding while another USTR investigation involving Indonesia remains unfinished. That inquiry concerns excess production capacity. Airlangga said the Indonesian government had answered questions submitted during the process, including questions about capacity.
Haryo Limanseto, spokesperson for the Coordinating Ministry for Economic Affairs, said separately that Jakarta was waiting for the official result. Based on the latest information received from the US government, the findings were expected to be announced soon, although no specific date was given.
The two processes create separate sources of uncertainty for companies handling Indonesian palm oil. The immediate question is whether Washington will grant a product-level exemption from the forced-labor-related tariff. The second is whether the excess-capacity inquiry will produce additional measures affecting Indonesian goods. Until both decisions are known, exporters and buyers lack full visibility on the cost of future shipments to the US.
Market access hinges on Washington’s decisions
Jakarta is using Indonesia’s relative compliance assessment as the main argument for special treatment of palm oil. The government expects that assessment to be considered in its discussions with Washington, while it continues to seek a more favorable outcome from the separate capacity investigation.
For the palm oil industry, the outcome matters beyond the headline tariff rate. A 10% additional duty can influence contract negotiations, sourcing decisions and the competitiveness of Indonesian supply against alternatives available to US importers. The negotiations will therefore determine whether a major Indonesian commodity receives different treatment from other products covered by the US measure.
