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[JAKARTA, KUALA LUMPUR] South-east Asia’s two powerful economies, Indonesia and Malaysia, are pushing to negotiate with Washington, pledging to address trade imbalances and reduce non-tariff barriers in a bid to de-escalate rising trade tensions and avoid punitive tariffs on key exports.

The delegations from both countries have engaged in high-level negotiations with their US counterparts to find a solution to the looming threat of high tariffs, which could hinder trade flows between both nations and the US.

With high-level meetings out of the way, the two countries will now dive into technical discussions with US in hopes of finding common ground.

Indonesia’s Coordinating Economic Minister Airlangga Hartarto, who is leading the delegation alongside Finance Minister Sri Mulyani Indrawati, said the country remains resolute in protecting its national interests as it engages in high-stakes tariff negotiations with the US.

Speaking at a press conference late Thursday (April 24), Airlangga – who has been in Washington since April 16 – said the delegation has held talks with key US officials, including Treasury Secretary Scott Bessent, as well as executives from major sectors such as the semiconductor industry and aircraft manufacturer.

“During the negotiation process, Indonesia is committed to prioritising its national interests while fostering stronger bilateral ties with the US,” said Airlangga. “Indonesia has also signed a non-disclosure agreement with the United States Trade Representative, marking the official beginning of the negotiation phase.”

With a US$17 billion trade surplus on the line, Indonesia is putting bold proposals on the table. Jakarta will focus on boosting US investments in its critical minerals sector and streamlining the processes for importing American horticultural products.

Jakarta previously offered to ramp up imports from the US by as much as US$19 billion – including around US$10 billion in energy purchases – as part of its strategy to ease trade tensions.

The government is also signalling flexibility by offering to cut non-tariff barriers and provide selective tax breaks for US goods.

Indonesia and Malaysia are among several Asian countries targeted by US President Donald Trump’s proposed 32 per cent and 24 per cent import tariffs, respectively. However, the tariffs have been put on hold for 90 days since early April to allow time for negotiations.

Malaysia has expressed its willingness to enter negotiations with the US, focusing on four key areas: reducing US trade deficit, easing non-tariff barriers, enhancing technological safeguards and security, and exploring the potential for a bilateral trade agreement.

Malaysia’s Minister of Investment, Trade and Industry Tengku Zafrul Aziz and Second Finance Minister Amir Hamzah Azizan have been in Washington since April 24, engaging in discussions with US Secretary of Commerce Howard Lutnick and US Trade Representative Ambassador Jamieson Greer.

“We are looking to explore alternative solutions to address US concerns while ensuring the continued flow of mutually beneficial trade between Malaysia and the US,” Tengku Zafrul said.

Malaysia views the 90-days pause as a crucial opportunity for constructive engagement.

The country has reaffirmed its decision not to retaliate against Washington, underscoring its willingness to work together in addressing the raised concerns.

Emphasising a decade of robust and increasingly balanced bilateral trade, Tengku Zafrul pointed to the declining Malaysia-US trade deficit as a clear sign of positive progress. Discussions also touched on expanding US-Asean cooperation, especially as Malaysia holds the 2025 Asean chairmanship.

“We are committed to keeping the momentum going and urgently addressing key issues within this 90-day window,” Tengku Zafrul added. “Malaysia remains open to ongoing discussions and is focused on achieving a mutually beneficial resolution to this tariff issue.”

Dim growth outlook

The tariff retaliation tensions sparked by Trump’s trade policies have led to a slowdown in the economic growth outlook for countries, particularly in Asia, which have direct trade links with both the US and China.

The International Monetary Fund (IMF) has revised Malaysia’s real gross domestic product growth forecast for this year down to 4.1 per cent, a decrease from its January prediction of 4.7 per cent, reflecting a broader trend of lowered growth projections across the region.

Meanwhile Indonesia’s Finance Minister Sri Mulyani Indrawati, who is currently in Washington for the IMF-World Bank meetings, warned that the spillover effects of reciprocal tariffs could hurt global economic growth, including Indonesia’s.

While exports to the US make up just about 2 per cent of Indonesia’s GDP, the ripple effects of US tariffs on its trading partners are poised to have a much larger impact on the economy.

Sri Mulyani cautioned that if the proposed 32 per cent tariffs are implemented, Indonesia’s GDP growth this year could be reduced by 0.3 to 0.5 percentage point, with the official growth target set at 5.2 per cent.