Trump term to have significant impact on Israel's economy

Isolationism and America First policies may impact Israeli exports of advanced technologies and drugs but geopolitical changes could open new markets and increase cooperation 


U.S. President Donald Trump's second term, that began on Monday, begs the question: How will it affect Israel's economy? In the past, transitioning administrations always had an effect on American military aid to Israel, on trade relations between the countries and on how Israeli companies operate in the U.S. and American companies in Israel.
Oded Raz, a senior policy advisor in the Israel-U.S. Chamber of Commerce, said Trump promised to make important economic polity moves in the early days of his term, some in complete contradiction to the policies of his predecessor Joe Biden.
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דונלד טראמפ בנאום בועידה השנתית של ארגון  IAC בוושינגטון
דונלד טראמפ בנאום בועידה השנתית של ארגון  IAC בוושינגטון
Donald Trump
( Photo: Chip Somodevilla /Getty Images )
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פעילות צוות הקרב החטיבתי גבעתי בג׳באליה
פעילות צוות הקרב החטיבתי גבעתי בג׳באליה
IDF soldiers operating in Gaza
(Photo: IDF)
Raz said he believes the Trump administration could affect Israel's economy on several levels because of his policies on taxes, military aid and regional geopolitics. And of course there are the repercussions on the global economy amid potential economic wars amid Trump's policies.
Trump is known to lean toward isolationism and protections for the American market. An important factor of his policies during his previous administration was taxes on imports, to protect American industries. This could impact Israel's exports of technologies, drug and and other advanced industries to the United States, which are a major factor of the local economy.
Raising taxes on American imports from China and Europe could also affect global supply chains that would be harmful to the Israeli industries that depend on imported materials. But this could also open up new opportunities for Israel if it prepares accordingly.
The outgoing administration already hit Israel's advanced technology exports when it announced limitations on the sale of superchips to a group of countries, including Israel.
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Trump was, in the past, a vocal advocate of U.S.-Israel security cooperation and had increased the military aid, including investments in defense technologies, a trend the Biden administration continued. This could bolster the local security firms to become an engine of the economy although it should not take the focus from other sectors such as health, climate, renewable energy and others, that the new White House has less of an interest in.
Trump says he wants to bring world peace
(Reuters)

Trump will try to expand the Abraham Accords to include Saudi Arabia. This could open new markets for Israeli exports, especially in the Gulf, but at the same time, one-sided measures against Iran could increase regional tensions and increase defense costs.
"Trump policies have the potential for new opportunities but also significant risks," Raz said. "Israel must work together with the new American administration and prepare for any scenario to maximize gains and minimize economic harm."
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