Israel Had a Trade Deal. It Still Paid More. |
On April 2, 2025, President Donald Trump imposed sweeping reciprocal tariffs on US trading partners. Israel was assigned a rate of 17 percent. After weeks of diplomacy — including Israel’s unilateral elimination of all remaining tariffs on American goods — the rate was reduced to 15 percent.
Australia paid 10 percent. Singapore paid 10 percent. Neither has a free trade agreement with the United States.
Israel has had one for forty years.
That gap is not an anomaly. It is a diagnosis. The 1985 US-Israel Free Trade Agreement — the first such agreement the United States ever signed — cannot protect Israel from modern trade policy tools. It never could. The agreement was built for a $5 billion, goods-based relationship. Today, bilateral trade exceeds $55 billion across goods and services, spanning pharmaceuticals, semiconductors, cybersecurity, and artificial intelligence. The legal architecture has not kept pace.
The tariff episode made that mismatch visible. Israel moved faster than any other partner to meet........