US President Donald Trump waves as he walks before departing for Florida from the South Lawn at the White House in Washington, DC, US, March 28, 2025. Photo: REUTERS/Evelyn Hockstein

The United States will impose 17 percent tariffs on goods imported from Israel under a major new trade initiative that US President Donald Trump announced on Wednesday, sending shockwaves throughout the Jewish state as Israeli officials expressed frustration with the decision.

The duty on Israel is part of Trump’s newly unveiled sweeping set of tariffs in which the US will impose a 10 percent baseline tariff on all imports to the US and higher duties on some countries with which it has larger trade deficits. Washington decided on the 17-percent figure for Israel because it is half of the 33 percent tariffs that the White House says the Jewish state has put in place for some American products.

Israel sends over $22 billion worth of commodities to the US annually, including diamonds, medications, and electronic devices. Israeli officials reportedly expect the country’s robust high-tech sector to be spared because they believe the US tariffs will not be applied to services.

However, if the tariffs do apply to the high-tech sector, the implications could be profound.

“If the tariffs apply to software products as well, particularly Software as a Service (SaaS) – the main area of activity for many Israeli high-tech companies – this move could fundamentally alter how Israeli companies approach the American market and even discourage potential investors and customers,” Karin Mayer Rubinstein, CEO of Israel Advanced Technology Industries, told The Jerusalem Post.

“We are all going to feel this in our pockets,” Ron Tomer, president of the Manufacturers Association of Israel, told Israeli radio on Thursday, claiming that the American tariffs against the Jewish state are tantamount to “abandonment by a friend.”

Trump’s announcement came one day after Israel removed all tariffs on US goods. Israeli officials had hoped that dropping the tariffs would prevent the White House from placing its own tariffs on the Jewish state. 

“The removal of tariffs on American goods is another step … to open the market to competition, to diversify the economy, and to lower the cost of living,” Israeli Prime Minister Benjamin Netanyahu said in a joint statement with Economy Minister Nir Barkat and Finance Minister Bezalel Smotrich. 

Jerusalem will reportedly launch efforts to convince the Trump administration to reverse its decision. 

Smotrich said that the finance ministry is still “analyzing” the expected and potential impact of the impending tariffs on the country and will be starting “discussions” with key figures across various Israeli industries. 

Israel and the United States — the Jewish state’s largest trading partner — completed $34 billion in bilateral trade in 2024. Of that, about $22 billion came from exports from Israel to the US.

Trump announced his so-called “Liberation Day” on Wednesday, in which his administration unveiled an expansive slate of tariffs on international trade partners, citing a “lack of reciprocity in our bilateral trade relationships” that is “indicated by large and persistent annual US goods trade deficits.”

Democratic Majority for Israel (DMFI), a US group advocating pro-Israel policies within the Democratic Party, slammed the Trump administration’s decision to levy tariffs against the Jewish state, arguing that the White House has fractured America’s relationship with arguably its closest ally. 

“President Trump made a grave error in slapping a higher tariff on Israel than on Turkey and even Iran, especially given the fact that Israel eliminated all tariffs on American goods,” DMFI President and CEO Mark Mellman said in a statement. 

Mellman argued that White House inadvertently helped the boycott, divestment, and sanctions (BDS) movement (BDS) against Israel advance some of its major goals. 

“The president’s action helps the BDS movement achieve one of its key goals — damaging the US-Israeli economic relationship,” he said. “This action undermines the longstanding and robust economic relationship between the United States and Israel, a relationship that has been built on trust, mutual benefit, and a commitment to free and fair trade.”