Israeli Prime Minister Benjamin Netanyahu was the first foreign leader to meet with President Trump, key Cabinet members and advisors about tariffs in Washington. Netanyahu met Secretary of Commerce Howard Lutnick and U.S. Trade Representative Jamieson Greer to discuss tariffs shortly after landing in Washington on Sunday, April 5.
Netanyahu also met Monday with White House envoy Steve Witkoff to discuss the efforts made by Egypt and Qatar to draft an updated ceasefire proposal, prior to meeting with President Trump.
Israel had hoped to avoid additional tariffs last week by announcing a zeroing of all tariffs on products from the United States, including on agricultural products, a longtime ask of the United States and frequent agenda item in trade discussions.
On April 2, however, Israel was assigned 17% tariffs despite lifting all
remaining duties on U.S. imports the day prior. Israel the first nation to make such an announcement.
Tariffs
The 17% rate Trump set for Israel was based on the U.S. trade deficit with Israel of approximately $7.4 billion in 2024 for goods. The U.S.-Israel trade volume in goods was $37 billion in 2024. Three main goods that Israel exported to the United States are diamonds, integrated circuits (also known as microchips), and broadcasting equipment, according to the Observatory of Economic Complexity.
The Manufacturers Association of Israel claims that Israeli exports will take an annual $2.3 billion loss from the tariffs if they remain at 17%. Between 18,000 and 26,000 Israelis could lose their jobs.
Areas that are expected to be hit hardest are hi-tech, including biotech, plastic, metals, chemicals and fuels, robotics and electronic components. A large share of Israeli exports to the U.S. are services, including the country’s high-tech sector, aren’t subject to the tariffs, nor were they factored into the trade deficit calculations.
Background
The United States signed its first Free Trade Agreement with Israel in 1985. The agreement is broad and applies to goods only. The U.S. has tried for years to renegotiate this FTA with little interest from Israel in doing so.
The United States is Israel’s largest trading partner. President Trump noted during the meeting with Netanyahu that the U.S. gives Israel $4 billion per year.
Next Steps on Trade
In the meeting Netanyahu held with Trump, he vowed to eliminate Israel’s trade surplus.
Both U.S. and Israel have expressed interest in both sides to negotiate a Digital Services Agreement, though neither side is prioritizing at the moment.
Israel is very interested in graduating to the Tier 1 list of countries within the U.S. Government’s AI Diffusion Rule currently under review.
Please contact the U.S.-Israel Business Council to share concerns and/or data points about how the U.S. tariffs on Israel will impact your business. U.S. Ambassador Nominee to Israel Mike Huckabee awaits confirmation from the full Senate after being voted out of the Senate Foreign Relations Committee last week. The U.S. Chamber’s U.S.-Israel Business Council looks to host him for a meeting to discuss these developments upon his confirmation and prior to his arrival in Jerusalem.