US tariffs threaten thousands of Israeli jobs, manufacturers, association warns

Netanyahu is the first world leader to discuss the impending tariffs with Trump.

By Pesach Benson, TPS

As many as 26,000 Israelis could lose their jobs if the United States does not roll back new tariffs on Israeli exports, the Manufacturers Association of Israel warned.

Despite Israel’s hopes of being exempted from Trump’s sweeping trade order last week, Israeli goods were hit with a 17% tariff.

About 98% of U.S. goods are already tax-free under the 40-year-old Israel-U.S. Free Trade Agreement, but the remaining 2% became a target under Trump’s new policy.

The Manufacturers Association presented an urgent economic analysis to Netanyahu ahead of his trip, estimating that the tariffs would slash Israeli exports by $2.3 billion.

“Between 18,000 and 26,000 Israelis could lose their jobs,” the association warned, calling the measure a serious threat to key sectors of the economy.

Among the industries most vulnerable to the new tariffs are hi-tech, biotech, plastics, metals, chemicals, robotics, and electronic components.

The association cautioned that if Trump expands the tariffs to include pharmaceutical and semiconductor exports, which have so far been spared, the total damage could reach $3 billion.

“The damage is expected to have a significant impact on the competitiveness of the entire economy, on the ability to attract investments, on our technological superiority and more,” wrote Dr. Ron Tomer, president of the Manufacturers Association, in a letter to Netanyahu.

Tomer also highlighted how hardware-focused duties could indirectly harm software and services exports, especially in the high-tech sector, where integrated business models mean losses in one area ripple through others.

“This will also directly harm the export of software services, and related services in Israeli high-tech,” he wrote.

“In light of the expected serious consequences, I call on you to take all diplomatic and economic measures at your disposal to prevent the imposition of taxes,” Tomer urged.

In a bid to mitigate the impact, Finance Minister Bezalel Smotrich signed an order on Wednesday eliminating the last remaining Israeli tariffs on U.S. imports, valued at $11.3 million annually, mostly on agricultural products.

However, the order requires approval from the Knesset Finance Committee before taking effect.

U.S. officials based the 17% rate on Israel’s $7 billion annual trade deficit with the United States. Israel exports $20 billion in goods to the U.S. while importing $13 billion.

The deficit, calculated as 35% of total Israeli exports, was then halved to determine the tariff percentage.

Prime Minister Benjamin Netanyahu is the first world leader to meet with U.S. President Donald Trump since the announcement of the new trade policy. The Israeli premier is expected to raise the issue directly with President Trump during their meeting at the White House on Monday.

The Trump administration says the tariffs will restore key U.S. manufacturing, but economists warn they could slow the global economy, raise recession risks and increase living costs.

Alongside the tariff crisis, the two leaders will also discuss the ongoing war in Gaza, the fate of 59 Israeli hostages still in Hamas captivity, the Iranian threat, Israel-Turkey relations and the International Criminal Court’s investigations.

Netanyahu will likely return to Israel on Tuesday.