Israeli officials, including Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich, will attempt to negotiate with U.S. President Donald Trump’s administration in the coming days to reduce the new 17% tariff on Israeli exports to the U.S., aiming to lower it to the 10% minimum imposed on some other countries.
The Prime Minister’s Office, Finance Ministry, Economy Ministry and the Manufacturers Association were not informed in advance of the planned tariff. Overnight, Smotrich met with Dr. Ron Tomer, president of the Manufacturers Association, to assess the impact on Israeli exports.
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US President Donald Trump presents his new trade policy
(Photo: REUTERS/Carlos Barria)
"We were aware of the tariff decision like everyone else but the specific rates were not known in advance,” The Finance Ministry said in a statement on Thursday.
According to the ministry, tariffs will apply only to goods, not services. Officials explained that the U.S. trade deficit with Israel — $7 billion annually — was a key factor in determining the 17% tariff.
Israel exports $20 billion in goods to the U.S. while importing $13 billion, creating a $7 billion deficit. The U.S. administration divided this deficit by total Israeli exports (7/20), yielding 35%, then halved that figure to arrive at the 17% tariff rate.
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Smotrich wrote on X (formerly Twitter): "Overnight, we thoroughly reviewed President Trump's new order, its rationale and the calculation formulas. This morning, we are analyzing its impact on various sectors, engaging with industry leaders and preparing response strategies — both in discussions with President Trump’s team and through measures to support Israeli industry."
Government ministries will assess possible responses in the coming days, including potential incentives for exporters affected by the high tariff. A government source suggested that Israeli exports to Europe and the Far East could benefit from the U.S. tariffs.
The source also noted that Israeli firms are unlikely to relocate production to the U.S. to bypass the tariff, as European countries are expected to impose tariffs on American imports.
Israel does not plan to impose new tariffs on U.S. imports. The government's previous decision to eliminate tariffs on $500 million worth of American agricultural imports annually will remain in place, as will the “What is Good for Europe is Good for Israel” trade policy.
Israel’s primary exports to the U.S. include machinery, electrical equipment, optical devices, medical instruments and pharmaceuticals. While total exports amount to $34 billion annually, $14 billion comes from services, which are exempt from the new tariff.
Meanwhile, Israel’s stock market opened lower Thursday following Trump’s announcement of his sweeping new tariff policy, rattling investors and stunning officials in Jerusalem.
The Tel Aviv 35 index dropped 0.16%, the TA-125 fell 0.20% and the Tel Aviv Banks index edged down 0.1%. In contrast to global markets, where the U.S. dollar weakened, the shekel fell against the dollar, which strengthened to 3.7 shekels. The euro traded at 4.08 shekels.