Israeli experts have reacted with profound concern to President Trump’s sweeping new tariffs that includes 17 percent on Israeli exports.
The new rates threaten to disrupt key industries, from high-tech to defence and have a significant impact on trade relations between Israel and the US – Israel’s largest export market. Israeli exports to the US accounted for approximately $34 billion in goods and services last year.
Economist Matthew Salter, former director of trade at UK Embassy Tel Aviv
Economist Matthew Salter is the former trade director at the UK Embassy in Tel Aviv. He told Jewish News: “You’d be hard pressed to find an economist outside the Trump administration who thought that the ‘Trump tariffs’ weren’t an extraordinary backward step in decades of progress towards trade liberalisation. It’s a massive tax on US consumers and risks sparking an all-out global trade war.
“With regards to Israel specifically, as the US is the number one destination for Israel exports, there is obviously the potential for significant economic damage that will be felt across a whole range of businesses. On top of which the rationale for the 17 percent tariffs being imposed on Israel seem to be based on nonsensical understanding of current tariffs (Israel imposes 0 percent on US imports and not 33 percent as claimed).”
Professor Elise Brezis
Elise Brezis is head of the Israel Macroeconomic Forum and professor at the Department of Economics at Bar-Ilan University.
She said: “The whole world is going to suffer from these tariffs, so Israel which exports goods and services will of course suffer but we have to check the elasticity of the goods exported, to know the impact of these tariffs”, adding that “the way the tariffs were calculated is: 20b-13b = 7/20 = 33 so half of 33 percent is 17 percent. Moreover, Israel claims that exports of goods are only 17, so it should be 23/2 = 11. So we will probably see a reduction from 17% to 10-11% in the next few weeks.
“The whole world will ask questions about the way the US has calculated these tariffs , so I suppose that this was a tactical move of the US, so that most countries will reduce some of the tariffs, which are very low already in most developed countries.”
Modi Shafrir, chief strategist, financial markets at Bank Hapoalim
Modi Shafrir, chief strategist, financial markets at Bank Hapoalim, noted that Israel is already feeling the impact. “The shekel has significantly weakened against the euro – due to sharp declines in US equity futures, alongside the strengthening of the euro globally.” However he remains optimistic that the tariffs will be cancelled or moderated for some countries, including Israel. “And if this happens then the impact on inflation will be marginal – and short-term – as current tariffs are on a relatively small number of products. And of course, a lot will depend on the geopolitical and political situation in Israel.”
Exports from China will be taxed at 34 percent, India at 26 percent, the European Union at 20 percent, South Korea at 25 percent, Japan at 24 percent and the United Kingdom at 10 percent. Jordan will be hit with a 20 percent duty, while Qatar, Egypt, Saudi Arabia and Lebanon will each be hit with 10 percent.
Minister of Finance Bezalel Smotrich has signed an order cancelling Israeli tariffs on imports from the US but the order requires approval from the Knesset finance Committee.
