The trade agreement between the United States and Indonesia reached in July is on the verge of collapse after Jakarta informed Washington it cannot honor several binding commitments it made as part of the deal, according to US officials.

"They're reneging on what we agreed to in July," a US official told Reuters on Tuesday, speaking on condition of anonymity. The official did not specify which commitments Indonesia is now questioning.

US Trade Representative Jamieson Greer is scheduled to speak with Airlangga Hartarto, Indonesia's coordinating minister for economic affairs, this week in an effort to salvage the agreement. The conversation comes amid growing frustration in Washington over what American officials view as Indonesian backsliding on terms that were already negotiated and announced.

An Indonesian government official responded Wednesday that tariff negotiations with the United States are proceeding on the track agreed by leaders on both sides. The source, also speaking anonymously, added that harmonization of language was required for the agreement.

What the July deal promised

Under the framework announced in July, Indonesia agreed to eliminate tariffs on more than 99% of US goods and scrap all non-tariff barriers facing American companies. In exchange, the United States would reduce threatened tariffs on Indonesian products to 19% from 32%.

President Donald Trump announced the deal on July 15, calling it "a huge win for our Automakers, Tech Companies, Workers, Farmers, Ranchers, and Manufacturers."

Indonesia also committed to purchasing approximately $19 billion in American products, led by 50 Boeing jets. The country agreed to eliminate certain requirements on products, including local content rules that had complicated efforts to sell American goods in the Indonesian market.

Trump said at the time he had dealt directly with Indonesian President Prabowo Subianto to finalize the agreement.

Where negotiations broke down

Indonesian officials have now told Greer that Jakarta cannot agree to some binding commitments in the deal and wants to reframe them, according to people familiar with the negotiations.

US officials believe such reframing would produce worse agreements for Washington than recent deals it has struck with two other Southeast Asian countries, Malaysia and Cambodia, the Financial Times reported Tuesday.

The newspaper cited US officials who believe Indonesia is "backsliding" on the elimination of non-tariff barriers on industrial and agricultural exports from the United States, as well as commitments to take action on digital trade issues.

"Indonesia is not just slow rolling the implementation of this deal as trade negotiators have experienced with other trading partners," one person familiar with the talks told the Financial Times. "Indonesia is outright saying they cannot implement what they agreed to and need to renegotiate the initial commitments to be nonbinding."

"This is extremely problematic and is not being well-received from the United States," the person added. "Indonesia may be at risk of losing its deal."

US Treasury Secretary Scott Bessent signaled trouble last week at a New York Times DealBook event, saying Indonesia "was getting a little recalcitrant" on its trade deal with the United States. He did not elaborate but contrasted Indonesia's behavior with Malaysia, which he said had proven to be a good actor by dropping thousands of line tariffs, allowing trade between the two countries to flow much better.

Domestic politics and sovereignty concerns

The US Trade Representative's office believes Prabowo and Airlangga agreed to the deal in July before circulating the details among other relevant top officials in the Southeast Asian country, according to people familiar with US thinking. American officials believe Prabowo could force the deal through but is holding back because of domestic political considerations.

Some Indonesian business groups have warned against removing local content rules, arguing the change could affect the competitiveness of domestic companies.

Apple was among the companies affected by such requirements. Indonesia late last year banned sales of the iPhone 16 for failing to meet a 40% local content requirement for smartphones. The ban was lifted only after Apple agreed to bring investment into Indonesia to manufacture smartphone components.

The trade deal has also run into other hurdles. The Financial Times reported in November that Indonesia was resisting attempts by the United States to accept coercive clauses on grounds that they impinged on its "economic sovereignty."

Washington has sought to include clauses in trade agreements stipulating that deals would be canceled if signatories sign a rival pact deemed to jeopardize essential US interests. Malaysia and Cambodia have signed deals containing such clauses, which are part of American efforts to counter China's influence in Southeast Asia, where Beijing is the largest trading partner for most countries.

Broader context

The potential collapse of the Indonesia deal comes as Trump has struck limited trade frameworks with a number of partners, including the European Union, United Kingdom, Japan and South Korea, along with smaller Asian economies such as Thailand, Cambodia, Vietnam and Malaysia.

While many agreements have resulted in the Trump administration cutting steep "reciprocal" tariffs for US trading partners, they have typically been presented as the first step in longer negotiations. Fuller negotiations on specific terms have repeatedly proved protracted and difficult.

Indonesia represents a significant market. The Southeast Asian nation is home to more than 270 million people and maintains substantial trade relationships with both the United States and China.

The framework reached with Indonesia was initially struck after Washington sent letters to more than 20 trading partners threatening them with a range of tariffs if they did not agree to a deal by August 1. In a letter to Indonesia, Trump had threatened to impose a 32% tariff, which was lowered to 19% in the announced deal.

If the agreement collapses, Indonesia would presumably face those higher tariff rates, though it remains unclear what steps either side might take next.

The Office of the United States Trade Representative declined to comment on the status of negotiations.