Israeli Prime Minister Benjamin Netanyahu is expected to meet U.S. President Donald Trump on Monday to discuss the recently announced tariffs. This impromptu visit, as reported by three Israeli officials and a White House official, could mark the first by a foreign leader to negotiate a deal to remove tariffs.
The surprise invitation by Trump came during a phone call on Thursday with Netanyahu, who is currently visiting Hungary. The Israeli leader raised the tariff issue during the call, prompting the U.S. President to extend an invitation for an in-person meeting.
However, Netanyahu’s office has yet to confirm the visit, which is also likely to include discussions on Iran and Israel’s ongoing conflict with the Palestinian militant group Hamas in Gaza. The new tariff policy announced by Trump imposes a 17% tariff on unspecified Israeli goods exports to the United States. This move could significantly impact Israel’s exports of machinery and medical equipment, according to an Israeli finance ministry official.
Global Trade Landscape Amid Tariff Tensions
The U.S. is Israel’s closest ally and largest single trading partner, and this new policy could strain the longstanding trade relationship between the two countries. In response to the U.S. tariff policy, Israel had already moved to cancel its remaining tariffs on U.S. imports on Tuesday. The two countries had signed a free trade agreement 40 years ago, and about 98% of goods from the U.S. are now tax-free in Israel.
The global trade landscape is also being reshaped by other countries’ reactions to Trump’s tariffs. For instance, Jaguar Land Rover has paused shipments to the U.S. as Trump’s tariffs come into force. Similarly, Nissan Motor is considering shifting some domestic production of U.S.-bound vehicles to the U.S. to mitigate the impact of Trump’s tariffs.
In Europe, Italy’s economy minister Giancarlo Giorgetti warned against the imposition of retaliatory tariffs on the United States in response to Trump’s tariff announcement. He called for a de-escalation with the U.S., highlighting the potential damage that a policy of counter-tariffs could cause.
The tariff announcement has sent shockwaves through global stock markets, wiping out $5tn in stock market value for S&P 500 companies by Friday’s close, a record two-day decline. Prices for oil and commodities plunged, while investors fled to the safety of government bonds.
The current situation has increasingly been resonating the 1930s, when the U.S. imposed the Smoot-Hawley Tariff Act, which raised tariffs on over 20,000 imported goods. This move was met with retaliatory tariffs from other countries, leading to a significant reduction in global trade and contributing to the severity of the Great Depression.
However, Trump remains unrepentant, stating that his policies will never change. The 78-year-old Republican, who was spending a long weekend golfing at his course in Palm Beach, Florida, is banking on the theory that the might of the world’s biggest economy will force foreign companies to manufacture on U.S. soil, rather than continue to import goods.
Otherwise, the impromptu meeting between Netanyahu and Trump could have far-reaching implications for global trade. The outcome of their discussions could either escalate or de-escalate the current trade tensions, with potential impacts on economies worldwide.