Israel shocked after Trump slaps 17% tariff on Israeli imports, Finance Ministry to analyze implications

The U.S. will impose a 17% tariff on Israeli imports, President Trump announced on Wednesday, as part of sweeping “reciprocal tariffs” reforms the administration declared on what it dubbed “Liberation Day.”

The Israeli government and financial officials appeared shocked at the move, as Israel had cancelled all remaining tariffs on U.S. imports the evening before.

On Thursday morning, Finance Minister Bezalel Smotrich said he studied the new order in depth overnight, including “the rationales and calculation formulas and potential outcomes for the State of Israel.”

The U.S. announcement did not include a detailed explanation of how the administration arrived at its numbers, with the published statistics claiming that Israel was charging 33% tariffs on US imports.

Dr. Ron Tomer, president of the Manufacturers Association of Israel, said the country’s industry is “deeply worried by the tariffs.”

“We’re trying to understand the rationale behind this move. The claim that Israel imposes 33% tariffs on American goods is unclear, and the 17% response seems unjustified.”

The Finance Ministry later stated that it hadn’t been informed about the tariff rate beforehand. It also said that service exports will be exempted from the tariff and published an explanation for the figures.

The rate of 17% was calculated by using the U.S. trade deficit with Israel of $7 billion (Israeli exports to the U.S. total $20 billion, Israeli imports from the U.S. total $13 billion per year).

According to the finance ministry, the U.S. administration took 7 (the trade deficit) and divided it by 20 (Israeli exports to the U.S.), equaling 0.35. This was then divided by two, and the resulting number (rounded up) is 17, which is the tariff.

“American imports to Israel have been 99% tariff-free since 1985. Israel eliminated the remaining 1% (mostly on food products) to appease Trump, and he still levied a 17% tariff on Israeli products,” noted Lahav Harkov, political correspondent at the Jewish Insider.

“Since this morning, we have been analyzing implications for the economy in various sectors and are holding a dialogue with industry and heads of the economy,” Smotrich said, adding he would soon hold a discussion “to analyze opportunities and risks and formulate courses of action, both vis-à-vis President Trump and his team and regarding the steps required to strengthen Israeli industry.”

Ynet News reported that the Israeli government could consider providing incentives to firms exporting to the U.S. to mitigate the tariffs. A source in the government said exports to Europe and East Asia could, in turn, benefit from the U.S. tariffs.

The recently announced decision to cancel the tariff on agricultural imports from the U.S., worth half a billion shekels per year, is expected to stay in effect, as is the “What’s Good for Europe is Good for Israel” program that facilitates U.S. imports.

Israel’s main exports to America are machinery and electrical equipment, optical instruments, medical and surgical instruments, and pharmaceuticals. Total annual exports amount to $34 billion, including $14 billion of services that will not be subject to the tariff, according to Ynet.

The Trump administration decided to apply a baseline 10% tariff on goods from most countries. In addition, 60 countries were identified as the “most serious violators” and received reciprocal tariffs amounting to half of the rates they imposed on American goods.

This includes the 17% rate on Israel and will take effect on April 9 at midnight U.S. time.

Among the countries slapped with the steepest tariffs are China ( 34%), India (26%), the European Union (20%), South Korea (25%), and Japan (24%).

Israel’s eastern neighbor Jordan will face a 20% duty, while Qatar, Egypt, Saudi Arabia, and Lebanon received a 10% rate.