Israel plans to cancel all remaining tariffs on U.S. imports to strengthen trade ties ahead of Trump’s new levies.
The move aims to boost competition, lower living costs, and protect Israel from fallout tied to U.S. tariff policy.
Finance Minister Smotrich briefly resigned over internal politics but is expected to be reinstated this week.
In a surprise move that’s grabbing attention from global trade watchers, Israel says it’s scrapping all remaining tariffs on imports from the United States. The announcement came Tuesday, just a day ahead of the Trump administration’s rollout of its new reciprocal levies on trade partners around the world.
Technically, the decision isn’t final-final yet—it still needs a signature from Economy Minister Nir Barkat and a sign-off from parliament’s finance committee. But both are expected to rubber-stamp it without much fuss.
“Once it’s done, tariffs on all imports from the United States will be cancelled,” said a statement from Prime Minister Netanyahu’s office.
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The U.S. isn’t just some regular trade partner for Israel—it’s the biggest one. In 2024 alone, the two countries did about $34 billion in bilateral trade.
“Removing tariffs on American goods is another step to open our market to more competition, boost the economy, and help lower the cost of living,” said Netanyahu in a joint statement with Barkat and Finance Minister Bezalel Smotrich.
They also stressed the political upside—tightening Israel’s already close alliance with the U.S. amid a tense global economic climate.
A 40-Year-Old Trade Deal Gets a Modern Boost
For context, Israel and the U.S. signed a free trade agreement back in the ’80s. Most American goods—roughly 98%—are already tariff-free. What’s left mostly covers agricultural imports, which bring in about 42 million shekels ($11.3 million) in taxes per year, according to the finance ministry.
Smotrich had already signed off on the move, and sent letters to Barkat and Agriculture Minister Avi Dichter, urging quick approval. In his words, it’s a necessary step to “protect the Israeli economy during a sensitive period.”
Trump’s Tariffs = Pressure
There’s another reason for the urgency. President Donald Trump’s upcoming trade policy, set to hit friendly and not-so-friendly countries alike, could have spillover effects. Smotrich warned that without this move, Israel could end up on the wrong side of the tariff wall, despite being a close U.S. ally.
“Eliminating tariffs on U.S. imports is a big deal,” he said. “It’s about keeping our economy stable and our relationship with the U.S. strong.”
The Agriculture Ministry did express concern about potential impacts on local farmers. Officials there said they may step in to offer support if Trump’s tariff rules start hurting Israeli agriculture.
A Bit of Political Theater, Too
In a weird subplot, Smotrich briefly resigned as finance minister earlier this week—something about needing to fulfill a procedural requirement to become a member of parliament again, but also tied to some internal beef with Itamar Ben Gvir, leader of the Jewish Power party, who’s been pushing for more ministerial clout.
Lawmakers are expected to vote Wednesday to officially reinstate Smotrich in the finance role. So… yes, a little messy, but business as usual.
