Trump tariffs risk shaking Israel's economic stability amidst conflict
The tariffs imposed on numerous countries by Donald Trump will affect Israel's economy, even though this is not its principal concern, according to the Israeli central bank.
Market turbulence and a slowdown in global trade are not the most pressing issues for Israel, 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 affected by tariffs.
The problem of tariffs for Israel. "Uncertainty weighs heavily"
However, this does not mean that Israel is unaffected by tariffs. Yaron explained that many pension funds are invested in the stock market, and the Israeli tech industry is largely financed by American venture capital funds. – To some extent, uncertainty impacts these two areas, and this directly affects our economy, stated the central bank governor.
He pointed out that the key issue for Israel is "reducing uncertainty as soon as possible." – This will assist the economy both here and abroad, he added.
The war with Hamas is Israel's main problem
It's worth noting that Donald Trump imposed a 17 per cent 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 USA of approximately £6 billion in 2024.
Bloomberg also reminds us that the Israeli central bank lowered its GDP growth forecast for 2025 to 3.5 per cent. The Israeli government is currently working on a package of proposals for the USA to lower the rates imposed by Trump, which have been temporarily suspended for 90 days.
The agency notes that the ongoing war in the Gaza Strip is the biggest challenge for Israel's economy. As a result, in March, inflation reached 3.3 per cent, exceeding the inflation target. The bank assesses that if the conflict escalates, a drop in GDP growth to 3 per cent is possible this year.
