Jakarta. Indonesia has officially become the first ASEAN country to strike a bilateral trade pact with Canada as Ottawa looks for ways to offset US tariff impacts.

The Indonesia-Canada Comprehensive Economic Partnership Agreement (CEPA) became one of the key outcomes of President Prabowo Subianto’s trip to Ottawa. Jakarta’s presidential press bureau reported that Canada had agreed to eliminate 90.5 percent of the import tax slapped on Indonesian goods. The freshly signed accord will see Southeast Asia's biggest economy granting Canada a trade liberalization of up to 85.8 percent of its tariffs, thereby bringing down the costs that will be passed on to consumers. 

Canadian Prime Minister Mark Carney estimated that the deal would clear the way for over 95 percent of his country’s existing exports to enter Jakarta at reduced or zero tariffs once the pact is in force. The deal must undergo ratification processes before it can take effect next year.

“Once fully implemented, they will be at preferential rates, making our exports obviously far more competitive. It will also give Canadian workers and businesses greater access to a market of over 300 million people," Carney told a joint presser.

Canadian businesses in agri-food, pulp, and paper are expected to greatly benefit from the pact. Carney was also quite frank about his intentions to search for new markets amidst a “disrupted global trading system”, alluding to US President Donald Trump’s punitive tariffs. He admitted that such disruptions had shown how important it was for countries to build a strong domestic economy, while at the same time “diversify and deepen” trade relations abroad.

“This is the right deal at the right time with the right partner. ... It [Indonesia] is an economy that is projected to be one of the world's top 5 economies in a few decades,” Carney said.

Prabowo talked of the CEPA in a more light-hearted manner. 

“It’s very strategic economically and politically. … We worked very hard. We studied 9,000 pages of agreement,” Prabowo said while laughing.

Official statistics showed Indonesia-Canada trade totaled nearly $3.6 billion in 2024, but Jakarta faced a $693.2 million deficit that year. Bilateral trade is witnessing an uptrend. In the first seven months of 2025, trade already hit $2.7 billion, up by around 29.8 percent year-on-year (yoy). Indonesia’s deficit rose from $458.6 million to $689.4 million over the said period. Indonesia is Canada’s biggest export market in the Southeast Asian region.

Both economies are subject to US President Donald Trump’s tariff hikes. US-bound Indonesian goods are now facing a 19 percent tariff, much lower than the originally planned 32 percent rate. Just last month, Trump bumped his import duties on Canadian goods from 25 percent to 35 percent.

Canada is also currently negotiating a free trade agreement with the ASEAN bloc.