Israeli Prime Minister Benjamin Netanyahu has vowed to eliminate Israel’s trade deficit with the United States in an urgent attempt to sidestep new tariffs under President Donald Trump’s sweeping trade policy.
At a Glance
- Netanyahu pledged to eliminate Israel’s $7.4 billion trade deficit with the U.S. and remove tariffs on American goods.
- Trump’s “Liberation Day” tariff plan includes a 17% tariff on Israeli imports.
- Israel is the first country to formally engage with Trump’s administration on the new tariff regime.
- Talks also addressed hostages in Gaza, Iran’s nuclear ambitions, and regional diplomacy.
- Netanyahu aims to pivot Israeli exports toward high-growth U.S. sectors like tech and agriculture.
Netanyahu Moves to Defuse Tariff Threat
Standing beside President Trump in the Oval Office, Prime Minister Netanyahu made a striking declaration: Israel will eliminate its trade deficit with the United States and remove all tariffs and non-tariff barriers on American goods. The announcement came as the Trump administration rolls out a new “Liberation Day” tariff formula, threatening Israeli imports with a 17% tariff.
“We will quickly eliminate the trade deficit with the United States,” Netanyahu said, according to reporting from the New York Post. The U.S. currently exports $14.8 billion to Israel while importing $22.2 billion in return, creating a $7.4 billion trade imbalance.
Netanyahu’s economic overture appears designed to exempt Israel from the new tariff regime, which includes a baseline 10% tariff, increasing based on the size of a country’s trade surplus with the U.S.
Trump’s Tariff Policy Triggers Global Ripples
President Trump has framed the policy as a “fair trade recalibration,” targeting countries with persistent deficits. While acknowledging the $4 billion in annual military aid the U.S. provides to Israel, he made no promise to exempt the country from the new levies.
According to Barron’s, more than 50 nations have contacted the administration to open negotiations in response to the tariff shift.
Markets reacted swiftly, with stock indices dipping amid fears of broader trade disruptions. Israeli officials were reportedly caught off guard, expecting the U.S.-Israel Free Trade Agreement—active since 1985—to shield them from such measures.
Watch Netanyahu’s Oval Office comments on trade with the U.S..
High-Level Meetings Signal Strategic Pivot
In addition to meeting Trump, Netanyahu held talks with Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. He described the discussions as “productive,” positioning Israel as a model for cooperative trade relations. The Israeli government appears to be banking on its tech and pharma sectors to narrow the trade gap through expanded exports and regulatory alignment.
The talks also touched on broader regional security issues, including Iran’s nuclear activities, Hamas-held hostages, and Turkish military involvement in Syria. According to the Wall Street Journal, Trump reaffirmed a preference for diplomatic solutions, signaling a desire to avoid new conflicts.
Trade Realignment as Diplomatic Strategy
Netanyahu’s pledge underscores a broader economic strategy: strengthen U.S.-Israel ties while protecting critical export markets from disruption. The prime minister’s plan includes accelerating cooperation in agriculture, medical technology, and cybersecurity—sectors where Israel holds competitive advantages.
Israel’s current deficit is primarily driven by its exports of machinery, diamonds, and electronics. Removing non-tariff barriers could boost U.S. market access in return, though critics caution that rapidly closing the deficit may involve painful domestic adjustments.
By pledging bold reforms and aligning with the U.S. on trade, Netanyahu is navigating one of the most consequential economic reconfigurations in decades—one that could reshape Israel’s standing in global markets while tightening its political alignment with the Trump administration.
