Israel has completely eliminated all tariffs on U.S. goods ahead of President Trump’s “Liberation Day” tariff plan, showcasing a bold move that prioritizes its most crucial economic alliance while simultaneously promising to lower costs for its citizens.
Quick Takes
- Israel has officially removed all tariffs on U.S. goods, including agricultural products, in a strategic economic move that strengthens its alliance with America.
- The decision comes just before President Trump’s planned implementation of reciprocal tariffs on trading partners, effectively exempting Israel from these new measures.
- Prime Minister Netanyahu emphasized this move will increase market competition, diversify Israel’s economy, and lower living costs for Israeli citizens.
- Bilateral trade between the U.S. and Israel reached $34 billion in 2024, with the 1985 free trade agreement already eliminating tariffs on 99% of goods.
- The tariff removal requires approval from Israel’s Economy Minister and the Knesset Finance Committee before becoming official policy.
Strategic Economic Partnership Strengthened
In a significant development for U.S.-Israeli economic relations, Israel has announced the complete elimination of all remaining tariffs on American imports. This decisive action builds upon decades of economic cooperation between the two nations, with the United States serving as Israel’s largest trading partner. The bilateral trade relationship has flourished to approximately $34 billion annually, with the U.S. importing $22.2 billion from Israel while exporting $14.8 billion in goods to the Middle Eastern nation. This removal of tariffs affects a range of products including fruits, vegetables, and other agricultural goods that had remained subject to customs duties.
The timing of Israel’s announcement is particularly noteworthy as it comes just ahead of President Trump’s planned “Liberation Day” – a sweeping application of reciprocal tariffs on nations trading with the United States. By preemptively removing all tariffs on American goods, Israel effectively positions itself to avoid being targeted by these new trade measures while simultaneously strengthening what Prime Minister Netanyahu described as “our special relationship with the United States.” The move demonstrates Israel’s recognition of America’s economic importance in its trade landscape.
Economic Benefits for Israeli Citizens
Prime Minister Benjamin Netanyahu emphasized the domestic economic advantages this policy change will bring to ordinary Israelis. “Canceling the customs duties on American goods is an additional step in the policy that my governments have led for a decade in opening up the market to competition, introducing variety to the economy, and lowering the cost of living. In addition to the economic advantages to the market and to the citizens of Israel, the current effort will allow us to further strengthen the alliance and ties between Israel and the US,” stated Netanyahu.
The elimination of these remaining tariffs, which currently amount to over $11.3 million annually in customs duties on American goods, represents the final step in removing trade barriers that began with the 1985 free trade agreement between the nations. That historic agreement had already eliminated tariffs on approximately 99% of U.S. goods by 1995, leaving only select agricultural products subject to import duties. Finance Minister Bezalel Smotrich has championed this “zero-tariff policy” as essential for maintaining positive trade relations with America.
Timing and Implementation
The directive to eliminate all remaining tariffs on U.S. imports still requires formal approval from both Economy Minister Nir Barkat and the Israeli Parliament’s Finance Committee before taking effect. Finance Minister Smotrich highlighted the strategic timing of this decision: “Fully eliminating tariffs on imports from the US is an important step to safeguard the Israeli economy during a sensitive period and to strengthen the economic relationship with our most important ally – the US. We will continue to act decisively to protect Israeli exports and preserve the competitive advantages of Israel in the international arena.”
“The current administration presents a real opportunity to shape a new strategic economic future for the two countries while strengthening Israel’s central role as an economic partner,” said Smotrich, emphasizing the broader vision behind this policy shift.
Agricultural Impacts and Future Policies
The complete removal of agricultural tariffs represents a particular challenge for Israel’s domestic farming sector. Industry experts note that new protective measures may be necessary to support local agricultural producers. Dan Catarivas, director general of foreign trade at the Manufacturers’ Association of Israel, explained: “The remaining tariffs are in place partly because we don’t want to be flooded by cheap agricultural products and to protect the local agricultural industry, which means that a removal of the tariffs will require the Israeli government to come up with an agricultural policy to support local producers.”
While some American supporters of the policy have suggested other nations should follow Israel’s example in preemptively removing tariffs, Israel’s unique relationship with the United States as a major strategic ally makes this move particularly significant. Bill Ackman, American billionaire investor, noted: “Israel sets the example on how all of our allies should preemptively respond to President Donald Trump’s desire to level the tariff playing field for America.” The policy signals Israel’s determination to maintain favorable trading status with its most crucial economic partner while simultaneously attempting to deliver economic benefits to its citizens through increased competition and potentially lower prices.
