NEW YORK (Bloomberg): If Benjamin Netanyahu thought his closeness to Donald Trump would spare Israel from high US tariffs, he was wrong.
The US president, who outlined new levies for almost all countries on Wednesday evening, has placed a 17% tariff on Israeli goods.
That makes Israel one of the hardest hit nations in the Middle East, despite its status as the United States' closest ally in the region and with the two countries coordinating closely over the Jewish state's wars against Iran-backed militias.
The decision came after Israel – which has the biggest trade surplus with the United States among Middle Eastern nations – eliminated all tariffs on American goods a day before Trump's announcement.
Israeli officials expressed surprise and concern. The shekel fell as much as 1.1% against the dollar on Thursday, though pared its losses to 0.1% as of 11.20am. in Tel Aviv. Israeli stocks fell 0.6%.
Israeli Finance Minister Bezalel Smotrich said he would immediately convene members of his ministry to discuss follow-up steps.
"We'll analyse the opportunities and risks and formulate courses of action, both vis-à-vis President Trump and his team and with Israel's industrial sector," Smotrich said on X.
An Israeli finance ministry official, speaking privately, said they would recommend to Netanyahu and Smotrich that they don't retaliate with counter-tariffs, and enter into negotiations with Trump straight away. The scrapping of tariffs on US imports should be kept, the official said, adding that a silver lining is the exemption of Israeli services – including its all-important tech sector – from Washington's levies.
Israel had a trade surplus, excluding services, of US$7.4bil with the United States in 2024, according to data released Wednesday by the United States Trade Representative. According to International Monetary Fund data, the figure was almost US$12bil last year.
"The impact on Israel's economy could be significant," said Michel Nies, an economist at Citigroup Inc. in London. "This will likely create further challenges for the Bank of Israel, which will have to balance the considerations of a reduction in demand against the impact from a possibly weaker shekel." – Bloomberg
