Trump’s 15% tariffs on imports from Israel take effect as part of sweeping global regime

The United States’ 15 percent tariff on imports from Israel took effect on Thursday, potentially costing the country billions of dollars, as part of a sweeping regime of international duties imposed by the Trump administration.

The tariffs are a setback for Israel, which had initially hoped to avoid the tax and later sought to lower it. The export market and tax revenues are expected to take a hit, and the damage could worsen if US President Donald Trump follows through on his plan to heavily tax semiconductors.

The US is Israel’s closest ally and largest single trading partner. The US imported $22.2 billion of goods and services from Israel in 2024, $7.4 billion more than it exported to the country. The 15% tariff is the same as those levied on the European Union, South Korea and Japan.

Israel’s Finance Ministry has sought to downplay the move, noting that the 15% rate is “at the lowest level among countries that have a trade deficit with the US,” which it said “reflects the ongoing dialogue between Israel and the administration with the aim of reaching an improved agreement.”

The tariffs are part of a new American duty system impacting goods from more than 90 countries. Trump argues that the tariffs are needed to reclaim money and respect that other countries have taken from the United States.

His critics, including most mainstream economists, say they will wreak havoc on the global economy and largely translate into higher prices for US consumers. They have already caused uncertainty in the US economy, with slower growth and a recent weak monthly jobs report.

“I think the growth is going to be unprecedented,” Trump said Wednesday afternoon. He added that the US was “taking in hundreds of billions of dollars in tariffs,” but he couldn’t provide a specific figure for revenues because “we don’t even know what the final number is” regarding tariff rates.

For months, Israel has tried to fight the tariff plan, with Prime Minister Benjamin Netanyahu traveling to the White House in April to discuss them. But during that visit, when asked about canceling the tax on Israel, Trump was noncommittal.

“Don’t forget, we help Israel a lot,” Trump said in the Oval Office at the time with Netanyahu beside him. “We give Israel $4 billion a year, that’s a lot.”

Talks between Israel and the US in recent months aimed to reduce the rate to a baseline of 10%, but failed to bear fruit. Nonetheless, the 15% rate is below the 17% that Trump had initially announced. The Manufacturers Association of Israel had warned that the 17% tariff rate could lead to a loss of jobs for as many as 26,000 Israelis.

As it currently stands, it is estimated that Israeli exports will take an annual hit of $2-4 billion, according to Ron Tomer, president of the association.

A survey by accountant Kobi Zalicha, a partner at Moore Israel – Lion Orlitzky & Co, which services companies that export to the US, estimated Israel will lose more than NIS 1 billion ($290 million) in tax revenue.

“At least a third of the exporters to the US have lowered their prices in the US to offset the hit to their competitiveness following the imposition of the tax,” the survey said. “While the reduction is only a few percentage points, this means a drop in the taxes they owe to Israel — that is, a drop in the taxes they’ll pay the state.”

The expected result of the tariffs, he wrote, is “loss and a bite into the revenues of the companies.” Job losses, he said, are “certainly probable.”

Trump says he is planning a 100% tariff on semiconductors produced by companies located outside the US. Should the tariffs include pharmaceutical and semiconductor components, 20,000 to 33,000 Israelis could lose their jobs, Tomer said.

The impact of the currently imposed US tariffs on Israel’s tech exports, which account for 53% of the country’s total exports to the US, is expected to be limited, as duties will not apply to the export of services, which make up about 70% of Israel’s tech exports. But the remaining 30% — physical goods, mainly machinery, industrial equipment, and similar goods — will be affected.

Israel has a lower rate than some other countries, which in certain cases have been penalized for running afoul of Trump’s will. Imports from Taiwan, Vietnam and Bangladesh are taxed at 20%. India faces a 50% tariff, in part because it is buying Russian oil, contrary to US demands, while Brazil faces the same rate, apparently in part because of the prosecution of former president Jair Bolsonaro, a Trump ally.

Trump also recently said that Canada’s intention to recognize a Palestinian state “will make it very hard for us to make a trade deal with them.”

Economist Shlomo Maoz said the 15% tariff may mean Israel got off relatively easy.

“If they were to tax Israel only, we would have taken a hard hit, because exporting to the US would have stopped being competitive,” Maoz said. “But in a reality where the whole world is being taxed, and the rate for some countries is even higher, the damage to us will be relatively small.”

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