On the eve of President Trump’s sweeping reciprocal tariffs, Israel has announced it will eliminate all remaining tariffs on U.S. imports — a strategic move to deepen ties with Washington and shield itself from possible trade fallout.
The final sign-off from Economy Minister Nir Barkat and Israel’s parliamentary finance committee is expected within days. Once complete, 100% of American goods entering Israel will be duty-free.
“The removal of tariffs on American goods is another step to open the market to competition, diversify the economy, and lower the cost of living,” said Prime Minister Netanyahu.
Why Now?
The U.S. is Israel’s largest trading partner, with $34B in bilateral trade in 2024. Roughly 98% of U.S. goods are already duty-free under the existing FTA signed 40 years ago — but the last 2% (mainly agriculture) accounted for 42 million shekels (~$11.3M) annually in duties.
Finance Minister Bezalel Smotrich pushed the policy forward, writing to cabinet members urging action before Trump’s tariff regime kicks in:
“Completely eliminating tariffs on imports from the U.S. is a significant step in safeguarding the Israeli economy during a sensitive period.”
Domestic Pushback?
The Agriculture Ministry said it may compensate local farmers hurt by the removal of tariffs, especially if U.S. produce becomes more competitive overnight. But the broader economic rationale appears to outweigh local friction.
“This will strengthen the alliance and ties between Israel and the United States,” Barkat added.
Smotrich briefly resigned on Monday for procedural reasons tied to a cabinet reshuffle, but will return to the Finance Ministry this week.
Israel is playing preemptive trade chess — dropping tariffs now to stay on Trump’s good side, lock in supply chain stability, and avoid being lumped in with ‘enemy countries’ when new U.S. levies land on April 2.
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