US-Indonesia Trade Deal: Collapse Risk & Trump’s Carveouts

Deere (DE) has warned that President Trump’s tariffs are backfiring on US farmers, prompting some to delay replacing outdated or old equipment.

The FT reports:

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President Trump and India’s Prime Minister Narendra Modi have spoken in a bid to ease trade tensions between the two sides. Modi said the conversation was “warm and engaging” and added that they had “reviewed the progress for bilateral relations and had also discussed regional international developments.”

Trump imposed 50% tariffs on India, 25% of which was due to India’s purchase of Russian oil. Hints that both sides were trying to reconcile and restart trade negotiations emerged earlier this week, with the arrival of US officials in New Delhi.

Bloomberg news reports:

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The US trade deficit narrowed in September to its smallest margin in more than five years, as exports increased healthily and imports grew slightly.

The deficit shrank by 10.9% to $52.8 billion, according to data released by the Department of Commerce on Thursday, marking the lowest level seen for the measure since June 2020.

Exports rose 3% to $289.3 billion in the month, while imports rose by a much softer 0.6% to $342.1 billion. The month saw noted strength in consumer goods exports, which reached a record high in September, while on the other side, imports of automotive vehicles, engines, and other parts fell to their lowest level since November 2022.

The real goods deficit narrowed by 5.6% on the month, equal to $4.7 billion. Making up that figure, real exports of goods gained 4.2% against a gain in nominal goods exports of 4.9%, while real imports of goods gained 0.7% equal to a gain of 0.7% in nominal goods imports.

Notably, the US’ trade deficit with China — a longtime preoccupation of the Trump administration and President Trump personally — shrank to $11.4 billion from a previous $15.4 billion, a change of roughly 25%.

US Trade Representative Jamieson Greer said on Wednesday that the US will other measures to recreate the $200 billion in revenues it is collecting under tariffs if the Supreme Court shuts down the use of the International Emergency Economic Powers Act that the Trump administration is currently using.

Reuters reports:

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CNN reports:

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Fed Chair Jerome Powell ‌on Wednesday pointed to President Trump’s tariffs as the reason for the current overshooting of the central bank’s 2% inflation target.

“It’s really tariffs that ‌are causing most of the inflation overshoot,” Powell said, while emphasizing that the central bank expects the tariffs to represent a “one-time” increase in prices.

“Our job is to make sure that it is,” he added.

Powell also declined to weigh in on a reporter’s question over the impacts of a potential Supreme Court decision striking down Trump’s most sweeping tariffs.

Read our live blog for the latest updates and analysis on the Fed.

Bloomberg News:

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US farmers have said they need more than a $12 billion aid package to fully offset the low crop prices and lost export opportunities resulting from President Trump’s trade war.

Trump introduced the aid package for farmers this week, with the industry welcoming the support, saying it would help them prepare for the next planting season. However, the industry suggested that it is a fraction of farm losses and will not rescue the flagging farm economy.

US farmers have faced steep losses this year due to Trump’s tariffs, saddled with low crop prices and higher costs for labor and inputs, such as fertilizers and seeds, and coupled with the decline in exports of crops like soybeans, which have dropped due to Trump’s trade dispute with China.

Reuters reports:

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Reuters reports:

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The trade deal between the US and Indonesia is in danger of collapsing, The Financial Times reported Wednesday, citing people familiar with the matter. US officials have grown increasingly frustrated at what they view as Jakarta reneging on the terms of the agreement reached in July.

The trade deal states that Indonesian goods will face a US tariff rate of 19%. Indonesia will also eliminate tariff barriers on over 99% of US products exported to Indonesia across sectors such as agriculture, health products, seafood, and technology.

However, the report said that Jakarta is slow to implement the deal.

The FT reports:

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President Trump defended his sweeping tariff policies, but suggested in an interview on Tuesday that he may allow for “some” additional carveouts after moves to slash duties on goods that were surging in price.

In an interview with Politico, Trump was asked whether he’d consider cutting tariffs on other consumer staples. In recent weeks, his administration has slashed duties on coffee, beef, and bananas, in a bid to address Americans’ concerns over price pressures.

Trump said he would “on some, and on some I’ll increase tariffs.” He said the breaks he approved recently amid a voter outcry against elevated prices on groceries in particular were “very small carveouts.”

“It’s not a big deal,” he said.

See the full interview here.

One of the key questions being asked is whether President Trump’s tariffs are helping to close the trade deficit. For the FT’s senior trade writer Alan Beattie, the answer is no.

The FT reports:

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China’s Premier Li Qiang said on Tuesday that tariffs have dealt a “severe blow” to global economies. These latest remarks from Beijing come as China’s trade surplus surged past $1 trillion.

The AP reports:

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Nvidia (NVDA) has been given the go-ahead from President Trump to sell some of its more powerful H200 chips to China.

Yahoo Finance tech editor Daniel Howley reports on the latest developments surrounding Nvidia’s chip sales to China.

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Bloomberg News reports:

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President Trump threatened Mexico on Monday with an additional 5% tariff over what he calls unfair treatment of American farmers.

Trump posted on Truth Social, saying that Mexico is violating its water treaty with the US and hurting Texas farmers’ ability to nourish their crops and livestock.

“As of now, Mexico is not responding, and it is very unfair to our U.S. Farmers who deserve this much-needed water,” Trump posted Monday. “That is why I have authorized documentation to impose a 5% Tariff on Mexico if this water isn’t released, IMMEDIATELY.”

The treaty Trump is referring to is the Utilization of Waters of the Colorado and Tijuana Rivers and of the Rio Grande, signed in 1944.

This 5% tariff would apparently come in addition to the 25% duties that Trump imposed on Mexico this year. Most Mexican goods, however, come to the US with smaller or no duties under the free-trade agreement between the countries.

Bloomberg reports:

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Hints that the US and India are on the verge of restarting trade talks emerged on Monday as two separate US delegations arrived in New Delhi this week to hold discussions with their Indian counterparts.

Bloomberg News reports:

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