Negotiations between Israel and the US on a new trade agreement, which would reduce tariffs on Israeli exports, are in advanced stages. The Ministry of Economy and Industry confirmed to “Globes” that relief is expected in relation to the 15% tariff imposed on Israel in August, as part of US President Donald Trump’s global tariff plan. However, the relief is not expected to be uniform and will vary between different industries.
“We hope that very soon we will have news for Israeli industry, about tariff cuts in the US,” Yifat Alon Perel, head of the negotiating team for talks with the US, and director of the senior trade policy and agreements division at the Foreign Trade Administration at the Ministry of Economy and Industry, told Globes. “We are in intense negotiations and, as mentioned, I believe that I will soon have news.”
Asked whether tariffs will be uniform for all Israeli exports, Alon Perel answered in the negative. “We are doing the maximum we can in the talks, for all industry, but it may not be uniform in all industries,” she admitted.
The Ministry of Economy and Industry declined to provide details on the breakdown of tariffs across the various export sectors. “This is still a sensitive negotiation,” said Alon Perl. Throughout the talks, Israel has attached great importance to attempts to ease customs duties on defense exports from Israel. This is because, unlike other products, defense industry products are sold primarily for government use and not for private consumption by US residents.
This week saw the first sign of progress in the negotiations. Minister of Economy and Industry Nir Barkat signed a new trade agreement on agriculture with US Trade Representative Jamieson Greer, who visited Israel, as the first step toward a comprehensive agreement.
Gradual quotas for protection until 2035
The agreement on agriculture, which will enter into force on January 1, 2026, marks the end of lengthy negotiations. Israel will grant tariff exemptions to about 300 items in the US food sector, including beef, poultry, dairy products, vegetables and fruits.
The background to the move lies in Prime Minister Benjamin Netanyahu’s promise during his visit to the White House in April, where he announced live that Israel would eliminate all tariffs on US imports. The promise sparked opposition from the agricultural lobby, and eventually a compromise was found. Instead of fully opening the market, Israel would subsidize the purchase of wheat from the US. The Americans jumped at the offer.
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As part of the agreement, 28 agricultural products were excluded, for which graduated protections were established for Israeli farmers until 2035. The legal memorandum published by the Ministry of Economy and Industry maintained import quotas for cheese, apples, pears, honey, powdered milk, frozen broilers, wine, and more. The quotas will increase gradually by about 2.5% per year, at the rate of population growth, and only at the end of 2035 will the tariffs drop to zero. These are products that, in the Ministry of Economy’s opinion, combine economic sensitivity with security sensitivity, since some of them come from border areas in the north and around Gaza.
According to sources in Israel, “There is no country in the world that gives Americans such access to the agricultural market. In the US, they understand the magnitude of the enormous step we have taken.”
The sweetener that Israel received from the US
In exchange for protecting Israeli agriculture, Israel has pledged to subsidize transport of wheat purchases from the US. This is a move that was strongly opposed by the Ministry of Finance, but it may have mainly symbolic value: American wheat is more expensive and of lower quality than that coming from other sources in Eastern Europe, and it is unclear to what extent the market will actually make use of this import from the US. The cost of the subsidy is estimated at tens of millions of shekels per year.
Trump’s tariff plan was announced in April as part of what he called Liberation Day. Israel was the first country to come to Washington to discuss the issue. The tariff rate imposed on it – initially 17% and later 15% – disappointed Israeli officials who had expected 10%, a figure that would have provided a comparative advantage.
The US is Israel’s largest trading partner. In 2024, exports of Israeli goods to the US totaled $17.3 billion and exports of services totaled $16.7 billion, compared with imports of $9.3 billion in goods and $4.8 billion in services. Currently, about 70% of goods exports are subject to the new tariffs. Israel has had a free trade agreement with the US since 1985, and the new agreement on agriculture replaces a previous arrangement from 2004.
Published by Globes, Israel business news – en.globes.co.il – on December 3, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
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