In a bold and unexpected announcement during a meeting with U.S. President Donald Trump in the Oval Office, Israeli Prime Minister Benjamin Netanyahu declared that Israel would “totally eliminate” its trade deficit with the United States. The statement came amid escalating trade tensions following the U.S.’s imposition of a 17% tariff on Israeli imports, part of a broader set of economic policies dubbed “Liberation Day” tariffs by the Trump administration.
This public commitment signals a strategic pivot in U.S.-Israel economic relations, one that could reshape how the two allies engage in trade moving forward. Netanyahu’s vow appears aimed at easing trade pressures while signaling Israel’s willingness to address U.S. economic concerns head-on. But can Israel realistically close a $7.4 billion trade gap? And will this be enough to prompt tariff relief from the Trump administration?
Background: The U.S.-Israel Trade Deficit
To fully understand Netanyahu’s declaration, it’s essential to grasp the scope of the current trade imbalance. In 2024, the trade deficit between the United States and Israel stood at approximately $7.4 billion. U.S. exports to Israel totaled around $14.8 billion, while imports from Israel reached $22.2 billion. This imbalance has made Israel one of the few close U.S. allies to maintain a significant trade surplus with Washington.
Much of Israel’s exports to the U.S. are in high-value sectors such as defense technology, cybersecurity, pharmaceuticals, and medical devices. In contrast, American exports to Israel include aircraft, machinery, agricultural products, and consumer goods.
While this trade relationship has historically benefited both sides, Trump’s administration has made it clear that deficits are no longer acceptable, even among allies. The recently introduced 17% tariff on Israeli imports was one of several aimed at correcting what the administration views as long-standing inequities in global trade.
Trump’s “Liberation Day” Tariffs and Their Impact on Israel
The tariffs—unveiled as part of President Trump’s wider economic agenda—represent a significant escalation in trade enforcement. The so-called “Liberation Day” policy imposes punitive tariffs on countries running substantial trade surpluses with the U.S., including Germany, South Korea, and Israel.
For Israel, the implications are serious. The 17% tariff could impact over $2 billion in exports, hitting sectors like tech hardware, semiconductor components, and industrial machinery hardest. Israeli manufacturers and exporters are now facing steep price disadvantages in one of their most important markets.
While some in Washington argue the tariffs will protect American jobs and rebalance trade, critics fear they could strain diplomatic relations and trigger retaliatory measures. For Israel, the pressure to respond has clearly been building—culminating in Netanyahu’s public commitment to balance the books.
Netanyahu’s Oval Office Statement
Flanked by President Trump, Netanyahu struck a tone of urgency and determination: “We will eliminate the trade deficit with the United States. We intend to do it very quickly. We think it’s the right thing to do,” he said.
The comment was both a diplomatic olive branch and a strategic economic signal. Netanyahu wants to show that Israel is a cooperative trade partner, one that values its economic relationship with the U.S. and is willing to adjust accordingly.
This marks one of the few times a foreign leader has publicly pledged to erase a trade deficit with the United States—a move likely aimed at encouraging Trump to reconsider the newly imposed tariffs.
However, when pressed on whether this commitment would result in tariff relief, Trump responded only by emphasizing America’s ongoing military aid to Israel: “We give Israel $4 billion a year. That’s a lot,” he said, without committing to lifting the trade penalties.
Trump’s Response and Economic Positioning
President Trump’s refusal to offer immediate tariff relief underscores his administration’s transactional approach to foreign policy and trade. Even with Netanyahu’s pledge, Trump framed the economic relationship through the lens of U.S. generosity and strategic leverage.
While Trump praised Israel as a close ally, his comments also served as a reminder of the economic expectations he has set for all trade partners—no matter how friendly the diplomatic ties.
Still, the conversation marked a rare moment of direct negotiation on trade at the highest level. If Israel follows through with specific measures to reduce its surplus, the U.S. may eventually reconsider its tariff stance.
