The move was made at the direction of Israeli Prime Minister Benjamin Netanyahu, who said he is aiming to cultivate more competition in the market, make the economy more diverse, and reduce the cost of living for the people of Israel.
Netanyahu said in a joint statement with Israeli Minister of Finance Bezalel Smotrich, and the country's Minister of Economy and Industry, Nir Barkat, "In addition to the economic benefits for the economy and citizens of Israel, this move will allow us to further strengthen the alliance and ties between Israel and the United States. We will continue to work to remove barriers and tariffs and to reinforce our special relationship with the United States."
Israel announced the plan one day before President Donald Trump was scheduled to levy reciprocal tariffs on US trade partners. According to the Office of the United States Trade Representative, the US is Israel's largest trading partner and closest ally, with bilateral trade worth $34 billion in 2024.
Fox News reported that 40 years ago, the two allies signed a free trade agreement that made approximately 99 percent of goods from the US tax-free. Israeli officials said the tariff reduction would apply to "a very limited number of products," mostly food and agricultural imports.
Smotrich said, "The current administration presents a real opportunity to shape a new strategic economic future for the two countries while strengthening Israel's central role as an economic partner."
Trump has dubbed Wednesday “Liberation Day,” when he is set to unveil a suite of tariffs on top of a 25 percent tariff on steel and aluminum imports, 25 percent tariffs on goods imported from Canada and Mexico, and a 20 percent tariff on goods from China.
