Israel likes to boast of its close ties with the Trump administration in the US, as evidenced for example in President Trump being persuaded to join the attack on Iran. But in the US tariffs program, Israel has received no preferential treatment, not in the result and not in the negotiations that preceded it.
Almost until the last minute, the Israeli government believed that the tariff on Israeli exports to the US would be 10%, in line with the provisional tariff imposed a few months ago, which would have given Israel an advantage over other countries. That hope evaporated overnight, with the announcement in Washington of the tariffs on each US trading partner. To the great disappointment of those responsible for the negotiations with the US – Prime Minister Benjamin Netanyahu’s economic adviser Prof. Avi Simhon, Minister of Finance Bezalel Smotrich, and Minister of Economy and Industry Nir Barkat – the tariff on Israeli exports was set at 15%.
Not just the final number, but also the way in which was set indicate that the Americans did not really consider Israel in their calculations. Trump declared that countries with which the US has a trade deficit that had not reached a new trade agreement would automatically have a 15% tariff imposed on them. Israel is one of those countries. But why has no trade agreement been signed between the two countries?
Israel offered the US many trade benefits in the initial discussions. In fact, almost all the details were finalized. There were no real gaps between the countries, at least not in the talks on the professional level. Signing a trade agreement would have brought Israel to the wished-for 10% tariff, but before the signing stage, the Americans suddenly disappeared. There was no-one with whom to sign the agreement, Israeli sources say.
The negotiations were unlike anything Israel had known up to now with the US – inconsistent, incoherent, and unclear.
Prime Minister Benjamin Netanyahu was the first world leader to go to the White House to discuss tariffs with President Trump, after the latter announced his global plan in April. Netanyahu promised in a live broadcast to the whole world that Israel would cancel all tariffs on US imports. The promise was not kept in full, because of pressure by the Israeli farmers’ lobby, which demanded protection for local produce. But Israel went back to the Americans with an even more generous offer: the state would subsidize the purchase of expensive wheat from the US.
The Americans seized on the opportunity and pressed their Israeli colleagues to finalize quickly the arrangement proposed by Minister of Agriculture Avi Dichter. The Ministry of Finance objected, but Netanyahu decided, and ordered compliance with the Americans’ wishes. In the end, the agreement was not signed, and not because of the Israeli side.
Why, in the end, did the US delay signature on an agreement that would have significantly reduced the tariff on Israeli exports? It would seem that the considerations were not economic, and were certainly not in the hands of the negotiating teams. In the end, the tariffs program is also a tool of foreign policy, a lever that Trump is using to pressure governments around the world to come into line with him on various matters. In Israel’s case, the most urgent context is Trump’s desire to end the war in the Gaza Strip and reach an agreement with Hamas on the return of Israeli hostages. That has still not happened, and – connected or not – neither has a trade agreement.
There is still hope that the picture will change and that the tariff will be reduced later on, when an agreement is signed. But once the new tariffs come into force and are applied to Israeli exporters, it will be harder to reverse them.
The tariff will be 10% on the UK, 15% on the EU, South Korea and Japan, and 25% on India, as a penalty for what Trump sees as unfair trade policy and for Indian purchases of arms and energy from Russia. Canada has also been penalized, with a 35% tariff.
A spokesperson for the Ministry of Finance said, “The tariff set by the US for Israel is at the lower rate for countries with which the US has a trade deficit, and is lower than the rate set for Israel on April 2 (17%). Israel’s inclusion in this group reflects the positive dialogue between Israel and the US administration. These talks continue with a view to reaching a comprehensive, improved agreement.”
Published by Globes, Israel business news – en.globes.co.il – on August 1, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
