Introduction: A Trade Tussle with a Key Ally
Israel is scrambling to mitigate the impact of U.S. President Donald Trump’s sweeping “Liberation Day” tariffs, which slapped a 17% duty on Israeli goods this week. The move came just a day after Israel eliminated all remaining tariffs on U.S. imports, sparking a diplomatic and economic pushback led by Finance Minister Bezalel Smotrich.
Trump’s Tariffs: A Global Salvo Hits Israel
Announced in April 2025, Trump’s tariff policy targeted both allies and adversaries, with Israel—a major recipient of U.S. military aid—facing a 17% levy on its exports. This followed Israel’s decision on Tuesday to lift duties on the remaining 1% of U.S. imports, a move Smotrich hailed as a gesture of goodwill. Yet, Trump’s administration pressed ahead, citing a $7 billion U.S. trade deficit with Israel in 2024, per U.S. Department of Commerce data.
Israel’s Response: Talks and Criticism
“The Ministry of Finance is maintaining an ongoing dialogue with the U.S. administration to reduce the scope of the tariffs,” Smotrich posted on X on Thursday, April 03, 2025. Having met U.S. Treasury Secretary Scott Bessent in March, he’s now spearheading efforts to soften the blow to Israeli industry. However, the move to drop U.S. import duties drew flak at home. Lawmaker Vladimir Beliak quipped on X, “Smotrich rushed to remove all tariffs… and in response received 17 percent tariffs. Genius.”
Industry Alarm: Manufacturers Association Reacts
Israel’s Manufacturers Association (MAI) called Trump’s tariffs “a major challenge,” noting they were blindsided by the announcement. “It’s probably related to the U.S. trade deficit with Israel,” the MAI stated, adding it’s working with both U.S. and Israeli officials to secure an exemption or reduction. The group fears the duties could harm exports like machinery and medical equipment, key drivers of Israel’s economy.
What’s Next for Israel-U.S. Trade Relations?
With bilateral trade valued at $37 billion in 2024, the U.S. remains Israel’s top trading partner. Smotrich’s team is now racing to negotiate a lower rate—possibly the 10% baseline applied to some nations—before the tariffs fully bite. As talks unfold, this dispute tests the resilience of the Israel-U.S. alliance in Trump’s tariff-driven era.
