Israel is among dozens of countries hit with a higher duty on local goods exported to the US, after President Donald Trump’s administration unleashed a fresh round of tariffs targeting its trading partners.
The Trump administration on Friday imposed new tariffs of 10% and 12.5% on goods from more than 60 trading partners, premised on the claim that foreign countries are not doing enough to clamp down on goods made with forced labor passing through their supply chains.
The tariffs came into effect just as a temporary 10% global tariff expired. Under the new tariff framework, Israel was levied a 12.5% duty on local goods exports, together with a list of countries, including Australia, Brazil, China and Japan, which the US says don’t have, or have failed to adopt, a forced-labor import ban.
Other trading partners, including the European Union, India, Mexico and the United Kingdom, are subject to a 10% tariff after committing to adopt, and effectively enforce, a forced-labor import prohibition.
“We are to some extent disappointed about the decision, as Israel took the concerns of the US very seriously and has shown great willingness to accommodate them,” Economy and Industry Ministry deputy trade commissioner Yifat Alon Perel told The Times of Israel. “We do feel behind vis-à-vis other competitors of Israeli manufacturers around the world that currently have better market access in the US.”
She added, “We are in ongoing negotiations and very much hope that our biggest ally and friend will not overlook Israeli concerns, and correct the decision at least to the level of other countries [with a lower tariff].”
But negotiation efforts between Israeli officials and the US administration have so far failed. Inevitably, local exporters of goods to the US, and the economy in general, will be hurt by the new trade tariff regime, and some will be forced to relocate and produce elsewhere or shut down altogether, the Israel Manufacturers’ Association has warned. Revenues from corporate taxes could also fall.
The higher tariff is a blow to Israeli export-oriented companies, which since 1985 have enjoyed duty-free access to the US market thanks to a free trade agreement between the two nations. The new duty will make Israeli goods entering the US economy more expensive and less competitive versus other countries, while revenues and profits generated by local exporters will decrease since their expenses remain unchanged.
“It’s bad for business and exports and Israel’s good trade relations with the US,” said Netanel Haiman, head of the Economics Division at the Manufacturers Association of Israel. “Trump’s new tariffs come at a critical time when Israeli exporters’ trade and revenues are already under strain from the sharp 20% appreciation of the shekel versus the dollar over the past year, while operating in a war situation on multiple fronts over the past two and half years has been affecting manufacturing.”
The US is Israel’s closest ally and largest single trading partner. The volume of Israeli exports of goods to the US totaled $20.6 billion in 2025, down 7.4 percent, or $1.7 billion from 2024, according to US government data. Imports of goods from the US to Israel amounted to $13.8 billion, down 6.4%, or $951.1 million from 2024.
About 30% of Israeli exports of goods will be affected by the new tariffs.
“Our industry is bleeding,” said Alon Perel. “Many companies have been affected already for the past year.
“Some are still waiting to see what’s going to happen and others are considering moving away from Israel and not to the US necessarily, because if Mexico and Canada and the EU and Britain have gotten better market access, then Israeli companies could be considering these destinations,” she cautioned.
Overall, the new tariff regime covers 99.4% of US imports, but includes numerous product exemptions, such as oil and gas, fertilizer, and certain food items. The move is part of Trump’s protectionist trade policy advanced over more than a year, intended to boost US manufacturing and create jobs.
Haiman criticized the Israeli government, saying it acted slowly although the US intention to levy new tariffs had been known for months.
“The government failed once again to deal with US trade relations,” said Haiman. “Of course, a 10% tariff would be preferable to 12.5%, but if the government would have acted faster and more decisively, then we could maybe even have gotten closer to zero tariffs.”
On Sunday, the cabinet approved Prime Minister Benjamin Netanyahu’s proposal to ban the import into Israel of goods produced, entirely or in part, through forced labor, to align with international trade standards. Regulations and an enforcement mechanism are expected to be finalized in the coming months.
“Israel passed a government resolution on forced labor in May and that was a signal to the US that we are going to act on their concern,” said Alon Perel. “To pass the legislation is a very long process and it was obvious that the Knesset would be dispersed ahead of national elections coming in October.”
Alon Perel pointed out that the Knesset, on its last day before dispersal on July 17, passed a “What is good for the US – is good for Israel” bill in its second and third readings. The reform, spearheaded by Economy Minister Nir Barkat, will permit manufacturing, sale and import of goods that comply with the requirements of American regulation to standardize and facilitate trade with the US, and is expected to greatly benefit US manufacturers exporting to Israel, Alon Perel said.
