Donald Trump's tariffs show US-Israel ties will be about leverage

The Jerusalem Post Economics and Domestic Affairs correspondent, Eve Young, is a good friend of mine. As I began to write my column for this issue of the Report, she rubbed her forehead in concern – and I understand why.

US President Donald Trump announced late last month that he would impose a 10% baseline tariff on all trade partners, with additional duties for many countries, which includes 17% tariffs on Israeli goods.

Many were shocked, but I cannot say that I was. Trump’s reputation as a staunch supporter of the Jewish state was just that – a reputation, key to maintaining his stronghold among Jewish conservative voters. In reality, it was a means to an end, and this end – the tariffs – is ridiculous.

Stocks took a nosedive following Trump’s announcement. According to Eve’s report, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite posted their largest two-day declines since the emerging coronavirus caused global panic.

The real concern right now surrounding these tariffs is that they may cause a global recession and increased inflation. Israel is one of the many victims that may suffer a significant blow as a result. Even if the tariffs do not impact Israel’s major export to the US – services – the country will still be significantly impacted by the tariffs on other countries, as they both increase inflation and slow growth in the US.

An illustrative image depicting US import tariffs. (credit: SHUTTERSTOCK)

Indeed, stock exchanges worldwide were shaken by the move, not just New York, with even the Tel Aviv Stock Exchange opening with a lot of red following the announcement.

This, after Israel’s been at war for over a year and a half. This, after Israel’s credit rating plummeted according to multiple agencies. This, after Israelis saw Trump as the country’s biggest ally.

Why is Trump putting tariffs on his ally, Israel?

There are multiple theories that Trump is doing this as some sort of trick; either bluffing to bring negotiations toward the US when it comes to global trade, or he is going through with it in order to force a fed tax cut.

This article, for clarity, was written prior to Prime Minister Benjamin Netanyahu’s planned trip to the US, during which he is expected to speak to the US president on the subject, and to be sure, Trump will be meeting with more than just Netanyahu; world leaders across the board are scrambling to convince Trump to back down.

If this is what friendship looks like, Israel should brace itself for the cost of loyalty. Trump’s transactional politics have never been about values – they’ve always been about leverage. And right now, he’s holding the world economy hostage, with Israel among the collateral damage.

Perhaps diplomacy can still prevail, and Netanyahu’s visit may help soften the blow. But Israel should take this as a reminder: Even the closest allies must have a contingency plan when politics – especially American politics – turn volatile.

Tariffs don’t lie. Allies don’t behave this way. And Israel should stop pretending it didn’t see this coming.