Israeli exports to US will take annual $2.3B hit under tariffs, industrial org warns
Urging Netanyahu to use all ‘diplomatic and economic measures’ to change 17% tariff, Manufacturers Association of Israel says between 18,000 and 26,000 Israelis could lose jobs
As many as 26,000 Israelis stand to lose their jobs if US President Donald Trump’s sweeping new economic policy, under which Israeli goods face a 17 percent tariff, remains unchanged, the Manufacturers Association of Israel warned on Sunday, hours before Prime Minister Benjamin Netanyahu departed for Washington.
While Israel had hoped to avoid Trump’s sweeping decree last week to impose levies on global imports, it was nevertheless hit with a 17% tariff despite lifting all remaining duties on US imports in a last-minute attempt to be spared.
According to an analysis published by the association and presented to Netanyahu, Israeli exports will take an annual $2.3 billion hit from the tariffs if they remain at 17%, and between 18,000 and 26,000 Israelis could lose their jobs.
In addition, the association warned that should Trump expand the tariffs to include the pharmaceutical and chip industries, which the sweeping edict has yet to touch, the damage to Israeli exports could reach an annual $3 billion.
The areas that are expected to be hit hardest, it said, were hi-tech, including biotech, plastic, metals, chemicals and fuels, robotics and electronic components.
The US is Israel’s single largest trade partner, and in 2024, it imported more than $13.5 billion worth of goods from Israel.
The damage caused by the tariffs “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 the president of the Manufacturers Association, Dr. Ron Tomer, in a letter to Netanyahu.
Warning of a worst-case scenario, in which the US also slaps tariffs on additional industries, Tomer noted that duties imposed on hardware exports “will also directly harm the export of software services, and related services in Israeli high-tech” due to the integrated business models implemented by many of Israel’s tech companies.
“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 wrote, urging Netanyahu to push the Trump administration on the matter.
“Through decisive and rapid action, it will be possible to prevent serious harm to the Israeli economy,” he predicted.
Ahead of Netanyahu’s departure for talks in Washington on Sunday, Finance Minister Bezalel Smotrich said he briefed him on the economic implications of the tariffs and on ways to prevent harm to the Israeli industry and economy.
The Finance Ministry has been studying the implications of the tariffs since they were announced last Wednesday, and has been working to examine the necessary follow-up steps.
Smotrich said on Thursday that he had been “personally” speaking to industry leaders about the impact of the 17% duty, and had led a discussion with the Finance Ministry management to “analyze opportunities and risks and formulate courses of action.”
As with markets worldwide, shares on the Tel Aviv Stock Exchange have plunged since Trump announced the dramatic policy, with investors wary of the possibility that it could ignite a global trade war.
On Sunday morning, the Tel Aviv Stock Exchange’s benchmark TA-125 index dropped 3.8 percent after slipping 0.4% last week. The TA-35 index of blue-chip companies was down 3.6%, and the TA-90 index, which tracks the shares with the highest capitalization not included in the TA-35 index, declined almost 4.5%. The TA-Insurance and Financial Services index, meanwhile, dived 4.6%.
“The tariff plan presented by Trump, which was published on Wednesday evening, led to declines on Thursday on all world markets, including Israel,” the Tel Aviv bourse said. “In addition, trading in the domestic market was characterized by volatility against the backdrop of the return to fighting in Gaza and internal political developments.”
Sharon Wrobel contributed to this report.
The Times of Israel Community.