Indonesian Apparel Tariffs to Fall Toward Zero
Importers of Indonesian apparel will see duties drop sharply once the Canada agreement takes effect on December 1, 2026.
Updated on Nov. 7, 2026 in International Trade
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The Indonesia-Canada Comprehensive Economic Partnership Agreement enters into force on December 1, 2026, after both countries exchanged formal notifications confirming ratification. Canada will liberalise 90.55 per cent of its tariff lines for Indonesian products, with the largest gains expected in textiles, apparel and leather goods.
Why it matters
Indonesian apparel currently faces average tariffs of 17.2 per cent on a trade-weighted basis, so the reduction changes landed costs for exporters and importers competing in Canada. Competing apparel sourcing hubs such as China and Vietnam will face a shifting price comparison once the preferential rates apply.
Bilateral trade reached $4.36 billion in 2025, up from about $3.57 billion in 2024, with Indonesia exporting around $1.69 billion and importing about $2.67 billion from Canada. Projected annual apparel tariff savings are C$70.5 million, though these projections depend on the agreement operating as modelled.
The players
Indonesia
Southeast Asian manufacturing economy whose apparel and textile exporters are the main beneficiaries of the reduced Canadian tariffs.
Canada
Advanced economy liberalising 90.55 per cent of its tariff lines for Indonesian products under the agreement.
The details
Under the agreement, Canada cuts duties on the bulk of its tariff lines for Indonesian goods, and the reductions apply to qualifying shipments once the agreement takes effect. For apparel, the trade-weighted tariff of 17.2 per cent is projected to fall to approximately 0.1 per cent, lowering the duty component of landed cost for Indonesian garments. Projections also indicate that textiles, apparel and leather products will account for a substantial share of the expected growth in Canadian imports from Indonesia.
Timeline
2025: Bilateral trade between Indonesia and Canada reaches $4.36 billion.
December 1, 2026: The agreement enters into force following the exchange of formal notifications.
Market Landscape
The agreement positions Indonesia to compete more directly with China and Vietnam, which are cited as competing apparel sourcing destinations for Canadian buyers. Tariff preferences of this scale tend to redirect sourcing decisions, so the relative cost position of Indonesian apparel in Canada is the key competitive variable.
Importers of Indonesian apparel should model landed costs against the 17.2 per cent current tariff and the projected near-zero rate from December 1, 2026. Apparel buyers comparing Indonesia with China and Vietnam should revisit supplier contracts before the agreement takes effect.
The takeaway
Trade-weighted tariff rates, not headline rates, determine the real cost advantage, so track product-level duty treatment once the agreement is in force. Confirm the applicable preferential rates for specific tariff codes with a qualified customs broker or trade counsel before finalising sourcing decisions.
Further reading
For broader context on how preferential tariff deals reshape sourcing, explore our coverage of International Trade.
Source note: This article includes information reported by Fibre2fashion.
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