Israel nixes all US import tariffs, day before Trump set to levy duties on trade allies
Smotrich signs directive to immediately scrap remaining tariffs on US goods, mainly in agriculture, with US president about to hit trade partners with tit-for-tat duties
Sharon Wrobel is a tech reporter for The Times of Israel
Finance Minister Bezalel Smotrich on Tuesday signed a directive to scrap all remaining tariffs on imports from the US with immediate effect, in an apparent attempt to win a reprieve from the Trump administration’s levy of reciprocal duties expected to be announced Wednesday.
The order was coordinated with Prime Minister Benjamin Netanyahu and Economy Minister Nir Barkat, but is subject to final approval by the Knesset Finance Committee.
In a letter sent on March 20 to Barkat and Agriculture Minister Avi Dichter, Smotrich asked for the removal of tariffs on products from the US, mainly in the area of agriculture, as reciprocal and sectoral tariffs on US trading partners are set to be imposed on April 2 by the US administration.
Israel and the US signed a free trade agreement in 1985. Under the agreement, the US and Israel implemented phased tariff reductions, eventually leading to the almost complete elimination of duties on manufactured goods in 1995. However, the agreement does allow the US and Israel to maintain some import and tariff restrictions, like quantitative restrictions and fees on agricultural products, mainly to safeguard local production and food security.
“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,” Smotrich said Tuesday. “We will continue to act decisively to protect Israeli exports and preserve the competitive advantages of Israel in the international arena.”
“The goal of the move is to promote a zero-tariff policy between the countries and maintain positive trade relations with the US,” said Smotrich.
Customs duties collected on imports from the US, mainly agriculture-related products, currently amount to a mere NIS 42 million ($11 million) per year, according to Finance Ministry data. The limited list of agricultural products that are subject to import tariff protection include apples, pears, persimmons, almonds, potatoes, tomatoes, peanuts, hummus, processed corn, and frozen vegetables, according to the Agriculture Ministry.
“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,” Dan Catarivas, president of the Israeli Federation of Bi-National Chambers of Commerce and Industry, told The Times of Israel.
The Agriculture Ministry said in response that it is examining the repercussions of the changes in the US administration’s trade policy and is working on formulating a support framework to minimize the harm to war-battered Israeli farmers in the periphery, ensure the viability of local production, and preserve national food security.
“The urgent demand to eliminate the remaining tariffs comes as it appears that Smotrich understood that [US President Donald] Trump decided to completely change the rules of the game of international trade and base them on ‘America first’ and national security interests,” he added.
“It looks like the US administration has decided that any country that imposes tariffs on American products will be reciprocated, meaning that in order to avoid any clashes between Israel and the US, the finance minister wants to abolish all the remaining tariffs on US agricultural exports to Israel,” said Catarivas, who is also head of the foreign trade division at the Manufacturers Association of Israel and a former Finance Ministry official.
“If Israel is included in the new trade policy, our agricultural exports to the US are going to be affected because they will be less competitive, as tariffs are hurting competitiveness and profitability.”
In his letter, Smotrich warned the economy and agriculture ministers about the significant change in the US administration’s global trade policy and potential consequences for Israeli imports, adding that Trump’s tariffs are expected to be imposed on both “friendly and enemy countries.”
Smotrich added that removing taxes is in line with the government’s policy in the fight against the cost of living, and will increase competition in the food sector.
Federation of Israeli Chambers of Commerce CEO Gilit Rubinstein commended Smotrich’s call to take action to “remove tariff and regulatory barriers that restrict imports from the US.”
“The removal of import barriers from the US is a necessary and beneficial step to avoid jeopardizing Israeli exports to the US,” said Rubinstein. “Reducing tariffs, along with regulatory relief, will also contribute to increasing competition and addressing the cost of living.”
Rubinstein said that the FICC is working with government ministries to support efforts to “remove the remaining barriers, such as those related to toys and baby products, food, transportation products, and more.”
