‘An Attack on Globalization’: Trump-Netanyahu Meeting Yields No Tariff Relief
Experts warn the US president’s protectionist trade agenda could harm both the world economy and Israel’s high-tech sector
Monday’s White House meeting between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu failed to produce a breakthrough on the new 17% US tariff imposed on Israeli exports. While Netanyahu pledged to eliminate Israel’s $7.4 billion trade surplus with the United States and remove all tariffs and trade barriers on American products, the US president made no commitment to reverse or reduce the tariffs on Israeli goods.
“We intend to do it very quickly. We think it’s the right thing to do, and we’re going to also eliminate trade barriers,” Netanyahu said.
The two leaders met as tensions rise over President Trump’s sweeping new trade agenda, which includes a baseline 10% tariff on nearly all imports and higher rates for certain countries. Israel, the US’s closest Middle East ally, finds itself unexpectedly caught in the fallout.
A $2.3 Billion Threat to Israeli Exports
The announcement of the tariffs sent shockwaves through Israeli industry. The Israel Manufacturers Association estimates that the 17% tariff could inflict a $2.3 billion hit on the country’s export economy and put between 18,000 and 26,000 jobs at risk. In a letter to Netanyahu just before his trip to Washington, association president Dr. Ron Tomer urged the government to “use all the diplomatic and economic tools at its disposal” to prevent implementation.
While Israel had hoped to avoid the new tariffs by eliminating its own import duties on American goods, the move failed to shield it. Tomer also warned that if the US extends tariffs to pharmaceuticals and chips, the damage could grow to $3 billion. Affected sectors range from biotech to chemicals, electronics, and metals.
Trump’s Economic Vision: ‘Economic Independence’
“Economic independence.” That’s the banner under which President Trump has reemerged on the world stage, sending tremors through the global trade order. With the reimposition of sweeping tariffs, the Trump administration is reshaping the terms of international commerce. Allies are feeling the strain, none more acutely than Israel.
In 2023, the US remained Israel’s largest trading partner. Israel exported approximately $20.3 billion worth of goods to America, led by diamonds ($5.43 billion), integrated circuits ($2.08 billion), and broadcasting equipment ($1.2 billion), according to data from the Observatory of Economic Complexity. With the new tariffs, those industries now face a more expensive and uncertain future.
“This is isolationism and autarky,” American political analyst Dr. Steven Terner told The Media Line. “Trump wants the US to become an entirely self-sufficient economy. But that comes at the expense of key allies and partners. Moreover, Trump’s tariffs won’t benefit Americans in the short or long term like he claims.”
Trump wants the US to become an entirely self-sufficient economy. But that comes at the expense of key allies and partners.
Dr. Roby Nathanson, general director of the Macro Center for Political Economics, told The Media Line that President Trump’s move amounts to “an attack on globalization,” adding that “we are moving from an economic system which was efficient and relying on comparative advantage to one that relies on economic power.”
Trade Policy Reversal
Prof. Yossi Spiegel, the Louise Lea Flack Chair in Game Theory and Interactive Decisions at Tel Aviv University’s Coller School of Management, noted that American pressure has historically shaped Israel’s trade policy. “In the past, Israel had significant tariffs on many imported products, including from the US. Over time, especially under American pressure, Israel opened its markets,” he told The Media Line. The 1985 Free Trade Agreement between the two countries marked a turning point.
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Reversing this course would be a blow to industries that have come to rely on open access to the US market
But that decades-old liberalization is now in jeopardy. Spiegel warns, “Reversing this course would be a blow to industries that have come to rely on open access to the US market.”
Tariff Impact on Broader Economy
The broader implications for Israel’s economy are considerable. Nathanson noted that the tariffs could reduce foreign direct investment and redirect high-tech operations from Israel to the US. “It could be a shift,” he said, especially if investors seek lower tariffs elsewhere. While he downplayed the risk of catastrophe, calling the tariffs “not good news,” he warned they could affect Israel’s GDP and long-term competitiveness.
“Even if many industries divert investment to America because of these tariffs, it takes time until an industry is built, until it finds a market, until it develops a product,” Nathanson said. “Tariffs can be imposed overnight, but recovery takes time.”
Global Trade Domino Effect
Across Europe and beyond, US tariffs have prompted a reevaluation of trade alliances. “Countries are definitely going to be looking for other partners to trade with,” Terner said. “They’ll look for replacement partners.”
The uncertainty is fueling volatility across markets. Investors are bracing for retaliatory tariffs and supply chain disruptions, while exporters question how to price goods competitively as import costs rise.
“We are likely to see a fragmentation of global trade,” Spiegel added. “Countries will prioritize regional agreements, and that could marginalize smaller economies like Israel if they don’t act quickly.”
High-Tech Sector at Risk
Israel’s close economic alignment with the US is now a double-edged sword. The sectors most exposed to the US market—pharmaceuticals, electronics, and especially high-tech—could face serious setbacks.
“Israeli and American high-tech both rely in part on Israeli high-tech manufacturing,” said Terner. “So if Israeli high-tech manufacturing is harmed, then Israeli high-tech services are also harmed.”
Major companies like Intel Israel and Tower Semiconductor may be forced to recalibrate. “If they lose the US as a client, they’ll be forced to downsize, fire workers, and delay deliveries to Israeli companies. That puts the entire supply chain at risk,” Terner warned.
Even traditional industries like diamonds aren’t spared. “They’re also impacted by the tariffs because those are goods that are going to become more expensive to import to the United States.”
Spiegel emphasized, “Israeli exporters will need to adapt quickly. Some may pivot to Europe or Asia, but that won’t happen overnight. We are dealing with structural changes, not temporary shocks.”
Reactions to Trump’s Trade Philosophy
Nathanson cautioned that the US shift from efficiency to economic force would hurt the global economy. “This is a trade war in which it’s a lose-lose situation—nobody wins,” he said. “Trump’s vision is to get out of the global markets the greatest advantage for America. He doesn’t care about what happens to anyone else.”
This is a trade war in which it’s a lose-lose situation—nobody wins
He added that while the American president sees strength in applying tariffs, the global economy could respond with stagnation combined with inflation. “It’s not just Israel. You can see all the stock exchanges reacting to this.”
Israeli Government Response
Nathanson doubts Israel will retaliate with counter-tariffs. “Israel is a small economy. It doesn’t have the power. It’s not like the European Union, which can coordinate a counterattack,” he said.
Asked what Netanyahu’s government could do, Nathanson replied, “I think the reaction will be to try and pressure Trump to reduce the tax that he imposed on Israel from 17%. They’ll ask for an exception.”
Spiegel was more focused on Israel’s internal options. “We’ve seen Israel navigate political and economic uncertainty before. What matters now is leadership and adaptability.”
As global markets adjust to a resurgent US economic nationalism, Israel finds itself navigating a new and uncertain landscape—one where economic independence for America could mean economic instability for its closest partners.
Nathan Klabin contributed to this report.
