Manufacturers warn up to 26,000 jobs could vanish; Netanyahu flies to Washington amid rising fears of deeper trade damage
Israeli exports to the United States — its largest single-nation trade partner — are about to take a serious hit. A newly imposed 17% tariff by the Trump administration could shrink export revenue by $2.3 billion, with thousands of jobs hanging in the balance.
That’s the grim forecast from the Manufacturers Association of Israel, which is now calling on Prime Minister Benjamin Netanyahu to act fast before the damage goes deeper. Hours before boarding a flight to Washington, Netanyahu was handed the data. It painted a stark picture: if nothing changes, a serious chunk of Israel’s industrial workforce could be out of work by year’s end.
The Fallout of Trump’s Trade Playbook Hits Home
This wasn’t supposed to happen — or so Israeli officials had hoped.
Last week, in a bid to dodge the fallout of a sweeping global tariff decree, Israel lifted all remaining duties on imports from the U.S. It was a Hail Mary move. But it didn’t work. Trump’s administration went ahead anyway, including Israel in the new 17% blanket tariff on foreign imports.
What makes this sting more is that this wasn’t targeted retaliation. It’s part of a broader economic push by Trump to shift trade leverage back to American soil, even at the cost of straining ties with traditional allies.
For Israeli manufacturers, the consequences could be devastating.
Job Losses, Factory Slowdowns, and A Shrinking Pipeline
The numbers are more than just abstract warnings — they’re already raising red flags on factory floors.
Between 18,000 and 26,000 Israeli workers are now at risk of losing their jobs, especially in export-heavy sectors. Small to mid-sized companies, many already operating on tight margins, may be forced to scale back production or shutter facilities altogether.
One senior official from the manufacturers’ group said bluntly, “This is not theory. These are real workers in real factories who are going to feel this in their paychecks — or not get a paycheck at all.”
It gets worse. The group’s analysis says if Trump widens the tariffs to include Israel’s booming pharmaceutical and semiconductor industries — which, for now, have been left untouched — the export hit could reach $3 billion.
Who’s Getting Hit the Hardest?
While no corner of the export economy is immune, some sectors are especially exposed. Here’s a quick rundown of industries currently under pressure:
-
Biotech and high-tech manufacturing
-
Plastics and industrial chemicals
-
Metals and fuel products
-
Robotics and electronic components
Israel’s innovation economy has long been its global calling card. But many of the products born in labs in Tel Aviv or production lines in Haifa are sold across the Atlantic — and now, they’re more expensive to import into the U.S.
One industry insider summed it up: “We’re not just losing profit. We’re losing competitiveness.”
What the Numbers Say
Here’s how the estimated damage breaks down, according to the Manufacturers Association:
| Sector | Projected Export Loss ($ Millions) | Potential Job Losses |
|---|---|---|
| High-tech & Biotech | 620 | 6,000–8,000 |
| Plastics & Chemicals | 480 | 4,000–5,000 |
| Metals & Fuels | 540 | 3,000–4,500 |
| Robotics & Electronics | 660 | 5,000–6,500 |
| Total | $2.3 Billion | 18,000–26,000 |
These figures don’t account for second-order effects, like lost business for Israeli suppliers, transportation, logistics, or even regional economies built around these industries.
Netanyahu Heads to Washington, Stakes Sky-High
This tariff battle is now landing squarely on Netanyahu’s desk.
The prime minister is expected to meet top White House officials this week in a bid to secure Israel’s exemption from the trade measure — or at least mitigate its blow. Sources close to the matter say Netanyahu is ready to “put everything on the table,” from security cooperation to procurement promises, in hopes of softening Trump’s stance.
There’s history here. Netanyahu and Trump have long touted their close relationship. But business is business, and that’s proving to be the stronger pull right now.
“There’s no special pass here,” one U.S. trade official said off the record. “If we give Israel a break, everyone lines up next.”
A Tougher Road Ahead for Startups and Investors
Beyond the legacy industrial sector, there’s a quieter panic setting in across Israel’s startup and venture capital circles. The tariffs may not directly apply to software, but the hardware-heavy side of tech — wearables, chips, IoT components — is suddenly looking less attractive to U.S. buyers.
Investors are spooked. Some VCs have paused late-stage funding rounds for companies with large U.S. export dependencies. Others are pushing portfolio firms to rethink their go-to-market strategies.
“Risk appetite just dropped,” one Tel Aviv-based investor said. “If you’re making a physical product that relies on U.S. distribution, you’re in trouble.”
Could This Backfire on the US Too?
American companies that rely on Israeli components — especially in medical tech and semiconductors — are warning that these tariffs could disrupt their supply chains. Israeli firms are known for quick turnaround times, flexibility, and niche tech that’s hard to replicate elsewhere.
“There’s no substitute for some of what we get from Israel,” said one U.S. CEO in the robotics space. “If we’re forced to pay 17% more, that’s going straight to the customer — or our bottom line.”
