After about 30 minutes of the press conference in the Oval Office, where Prime Minister Benjamin Netanyahu was sitting on his right, US President Donald Trump presented his first comment on the question that was casting a shadow over the Israeli economy during the past week. Will Israel be granted from the Trump tariff plan, or is the 17 % customs tariff for Israeli goods is the last word?
Trump's answer was short, mysterious and not binding. He also competes for a businessman at the beginning of the trillion dollars in talks with countries all over the world, where Israel is just Mino, “We are talking about a full new commercial agreement”, which began to turn his head towards Netanyahu, at a moment of optimism on the Israeli side. After that, Trump boycotted himself in the middle of the sentence, and he tilt his head in the opposite direction, and said: “Maybe not. Don't forget that we are helping Israel a lot. We give Israel $ 4 billion a year. This is a lot,” referring to US military aid to Israel.
Senior officials alongside politicians
In the coming days, contacts between senior officials of the Israeli Finance Ministry and the Ministry of Economy and their counterparts in Washington will begin. However, the dynamics of dialogue on the definitions with the American administration are very central. Understanding on the Israeli side is that President Trump maintains the only authority to decide on this issue. The US Minister of Trade, Howard Lottenic, a Jew who loves Israel and is responsible for the Trump tariff plan and met with Netanyahu separately, cannot move forward yet, but the decisions remain in the hands of the president himself.
Thus, the talks between Israel and the United States are expected to follow two parallel paths: the first track is a professional dialogue between officials in the ministries of economics and Israeli and the US Department of Trade – here technical details will be discussed. For example, clarifying question marks about products in seam between customs duties exempt and goods that will be subject to customs duties. This is mainly important in the technology industry, which is supposed to be greatly excluded, but there is no clarity, for example, with regard to devices associated with software and cybersecurity services.
In this regard, the main issues that arise are the United States' demands for mutual purchases: a mechanism in which the Israeli government requires foreign companies that win tenders in Israel to buy part of its production of local suppliers. Americans see this mechanism as an obstacle to their companies, especially small and medium -sized companies that have difficulty meeting these requirements.
The second track is a direct political channel between the Prime Minister's office and the White House. Here, strategic decisions are discussed, and in this case, the issue of customs tariffs is also, but not in isolation but as part of a broader group of mutual interests.
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Concessions in exchange for political movements?
The fact that senior officials from the Ministry of Finance did not accompany Netanyahu on his visit to Washington indicating the nature of the meeting. Finance Minister Paisalel Sottic remained in Israel, although he wanted to join the delegation to the White House, as the person responsible for dealing with the issue of definitions and its effects on the Israeli economy. The decision to preserve the professional level in Israel was born from the understanding that the meeting was political and diplomatic in the first place, not economic and technical. At this stage, the dynamic is between the two leaders and not between the professional teams.
Senior Israeli figures believe that behind closed doors, the meeting was more positive than general data. More reassuring messages have been transferred in closed conversations, and may also indicate that there is a way to reach a solution, but the process will be gradual and will include demands that Israel must fulfill.
The tariff negotiations are not made in a vacuum. Israel and the United States are holding talks on a variety of strategic important issues – from Iran and its nuclear program, to efforts to normalize with the Kingdom of Saudi Arabia, to the issue of war and hostage in Gaza, and post -war arrangements.
In discussions between two leaders with many common interests, an economic aspect such as customs tariffs may be integrated into a wider tissue of deals. The final deal may come in the form of a deal: a tariff from the United States in exchange for progress in the important political paths of Trump.
In the end, from the perspective of the American administration, the main goal of the customs tariff step is directed to the main players in the global economy, such as China, the European Union and Japan. Israel at the second level is economically important, but at the first level politically, which may allow relative flexibility.
A sharp decrease in exports, thousands of workers' demobilization
While political levels work in negotiations and believe that an agreed solution can be reached, anxiety grows in the business sector. He sent a head of business presidency, Dubai Ametay, an analysis of the great risks to the economy to the Prime Minister, the Minister of Finance, and the Minister of Economy.
The analysis warns of the low demand for Israeli products in the American market due to the price increased by 17 %; The damage to the growth of GDP due to low exports, which constitute a major component of gross domestic product; Job losses in industries directed towards export (about 10 % of jobs in Israel depend on exports); A decrease in foreign investment in Israel; And the risk of closing companies or transporting operations from Israel abroad to circumvent definitions. In his letter, Amitai wrote, “We are studying anxious risks to the Israeli economy.” He recommended that the government behave “with great caution, with an understanding of the context of the decision and the sensitivity of the fabric of relations with the American president.”
At the same time, the Association of Manufacturers provided worrying data: according to its analysis, the new definitions could lead to a decrease of $ 2.3 billion in annual Israeli exports to the United States. The President of the Association of Manufacturers, Ron Tomer, warned that if an additional tariff is imposed on the pharmaceutical industries and chips, which is currently exempt, the decrease in exports will reach 3 billion dollars. The Association of Manufacturers, the human dimension of the crisis, emphasized: between 18,000 and 26,000 Israeli workers in intensive industries in export can lose their jobs. The effect will be particularly perceived in industries such as biotechnology products, plastic, minerals, chemicals, robots and electronics.
A number of question marks remain
A large question mark hanging on other major industries. The diamond industry, which exports more than 50 % of its exports to the United States, at a value of $ 3.5 billion per year, is still awaiting clarification about whether it will be exempted from the definitions. The exemption from the trade deficit of Israel can significantly reduce the United States, on which the new tariff is calculated, to less than 17 %.
As for the defense industries, which constitute a large column of Israeli exports to the United States, it is still unclear whether it will be exempted from the customs tariff policy. On the one hand, their exclusion is logical due to the close security cooperation between the countries, but on the other hand, there is no official commitment to this.
Meanwhile, the steps that the government has already announced – canceling all Israeli definitions on American products imported to Israel and expanding recognition of American standards – are considered gestures of fame that can help this process.
It was published by Globes, Israel Business News – En.globes.co.il – on April 8, 2025.
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