Poor Netanyahu but not poor Israelis.
Israel’s government has said it will cancel all remaining tariffs on American imports, in an apparent bid to ensure that it is exempt from a new wave of levies that President Trump is set to announce on Wednesday.
Israel and the United States, two close allies, have had a free-trade agreement since 1985 that excludes most American products from Israeli tariffs. On Tuesday, Prime Minister Benjamin Netanyahu of Israel presented the decision to remove all remaining tariffs as a move toward greater trade liberalization.
This is from Matthew Mpoke Bigg, “On Eve of Trump’s Tariffs Announcement, Israel Says It Will Lift All Duties on U.S. Imports,” New York Times, April 2, 2025.
Poor Benjamin Netnayahu. He clearly must have thought that when Donald Trump said he wanted reciprocal tariffs, Donald Trump must have wanted reciprocal tariffs. What Netenyahu didn’t understand is that Trump doesn’t want reciprocal tariffs. Instead, he wants to impose high tariffs on products from most countries no matter the tariff policy of the particular country.
There is one bright spot. Having zero tariffs on all imports from the United States is a good move that will benefit most Israelis and cause their real GDP to be slightly higher. It would be even better for most Israelis if Netanyahu were to cut tariffs on all imports to zero.
READER COMMENTS
Alan Goldhammer
Apr 4 2025 at 4:37pm
David’s comment about the rise in GDP won’t happen. As long as Israel is occupied with their wars on four fronts, the country’s economy will continue to suffer. Israel has mobilized a large number of reservists, removing them from the working economy. Secondly, most Israeli imports from the US are weapons, ostensibly for defensive purposes. These are provided at little or no cost to Israel.
David Henderson
Apr 4 2025 at 4:55pm
Alan, Think on the margin. There’s a reason I said “slightly.”
Alan Goldhammer
Apr 4 2025 at 7:52pm
David, ‘miniscule’ would be my choice of words. :0
Richard W Fulmer
Apr 5 2025 at 2:19pm
Israel’s GDP would be a lot lower if they chose not to defend themselves against terror, rocket, and missile attacks.
“It needs but one foe to breed a war, not two…, and those who have not swords can still die upon them.” J. R. R. Tolkien
David Henderson
Apr 5 2025 at 3:49pm
But I think Alan’s point is that they’re fairly price-insensitive on the weapons they buy from the United States and so, tariff or no, they would buy almost the same amount of weaponry.
Alan Goldhammer
Apr 5 2025 at 6:14pm
The other thing that hamstrings the economy are the subsidies they provide the Ultra-Orthodox Jews who comprise 15% of the total population. They are also the fastest growing group as they do not practice birth control and most of the families are 6-8 children. This group gets paid to study Biblical texts all day long and they don’t have a requirement for military service. This practice, necessary for political reasons, is a real drain on the economy.
Mark
Apr 5 2025 at 1:39pm
The real winners in all of this are the Netherlands: since the US has a trade surplus with the Netherlands, surely the Trump administration will impose negative tariffs on Dutch imports. It’s only fair, right?
Mike Burnson
Apr 7 2025 at 9:30pm
The EU as a bloc enjoyed a $235 billion trade surplus with the US in 2024; January and February both set new monthly records. That was likely due to last-minute pushing of exports to the US ahead of the tariffs.
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