Israeli companies respond to news of Trump tariffs with hiring freezes, revamping business strategy

The Trump Administration announced a 10% baseline tariff rate on all imports and a 17% tariff on Israeli goods.

By Vered Weiss, World Israel News

Israeli companies are bracing for the impact of US tariffs on Israeli products, with some putting a freeze on hiring and revamping their business plans.

Despite Israel’s preemptive move on Tuesday to eliminate tariffs on US products, the Trump Administration did not reciprocate, as expected. It announced a 10% baseline tariff rate on all imports and a 17% tariff on Israeli goods.

When asked why such a high tariff was imposed on Israeli goods, a Trump official said, “Israel steals a lot of intellectual property from, for example, the pharmaceutical manufacturers in this country.”

Trump’s strategy of enacting tariffs is intended to protect US businesses and to redress a perceived trade imbalance that Trump says has left  the US “looted pillaged, raped, and plundered by nations near and far, both friend and foe alike.”

He termed his tariff policy a “declaration of economic independence,” with some foreign leaders threatening to impose tariffs on US goods in retaliation.

Israeli industry is reeling from the shock of the tariffs, with manufacturing expected to be hit the hardest and companies providing services rather than products affected least by the levies, since services are not subject to tariffs.

“In our recent discussions with Israeli high-tech CEOs and entrepreneurs, we’ve noticed a recurring trend. The first companies to be impacted or enter a phase of reassessment are those in manufacturing,” said Inbal Horesh, CEO of Gifthead.

She added that many companies are holding off on making non-essential hires and grasping the implications of the tariff issue before making major decisions.

Horesh emphasized that this is “not a moment for panic” but a time to “build action plans with several backup scenarios.”

Some Israeli companies have already calculated the possibility of higher tariffs in their risk assessment.

Israeli real estate and construction companies operating in the US  are bracing for challenged profit margins, a more complicated exporting process, and less profitable American projects.

Some experts expect the tariffs to put a damper on investment and innovation.

Assa Drori, Chief Risk Solutions Officer at Okoora, stated that the tariffs will “diminish the appeal of exporting goods from Israel to the US, as many competing countries have lower tariff rates than Israel.”