Tariffs add uncertainty, but war remains Israel’s main concern
The tariffs imposed by Donald Trump on many countries will affect Israel's economy, though they are not its primary concern, according to the Bank of Israel.
Market fluctuations and a slowdown in global trade are not Israel's main issues, Amir Yaron, the Governor of the Bank of Israel, stated in an interview with Bloomberg TV. This is because the country predominantly exports services, which are not subject to tariffs.
The problem of tariffs for Israel: "uncertainty weighs heavily"
However, this does not mean that Israel is completely untroubled by tariffs. Yaron explained that many pension funds are invested in the stock market, and the Israeli tech industry is significantly funded by American venture capital. "To some extent, uncertainty affects these two areas, and it directly impacts our economy," said the central bank governor.
He noted that the key issue for Israel is "reducing uncertainty as quickly as possible." "This will benefit the economy here and abroad," he added.
It's important to mention that Donald Trump imposed a 17 percent tariff on Israel—some of the highest in the Middle East. As Bloomberg highlights, this occurred despite the traditionally strong alliance between the two countries. Excluding services, Israel had a trade surplus with the U.S. of approximately $7.4 billion in 2024.
Bloomberg also notes that the Israeli central bank revised its GDP growth forecast for 2025 to 3.5 percent. The Israeli government is currently working on a package of proposals to persuade the U.S. to reduce the tariffs imposed by Trump, which have been temporarily suspended for 90 days.
The agency points out that the ongoing conflict in the Gaza Strip is the most significant challenge for Israel's economy. Consequently, in March, inflation rose to 3.3 percent, surpassing the target. The bank estimates that if the conflict escalates, GDP growth could drop to 3 percent this year.
