Alma Hernandez

The United States and Israel have one of the most durable trade relationships in the world. The United States-Israel Free Trade Agreement, established in 1985, was the first free trade agreement entered into by the United States and generates billions of dollars in Israeli investment in the U.S. economy annually. The U.S. exported almost $15 billion of goods to Israel last year.

This robust economic relationship is why President Trump’s proposal to apply a 17 percent tariff on American trade with Israel caught many off guard, especially after Israel promised to eliminate all its remaining trade duties on American imports before the new tariff was even applied. Israel has a trade surplus with the United States, partly because Israeli versions of U.S. consumer goods are often produced there. For example, Israeli Coca-Cola products by the Central Beverage Company (Coca-Cola Israel) and Ben and Jerry’s products in Israel are made locally by franchisee Avi Zinger.

Israel is a high-tech giant in the global top five for research and development, technology education, and patents. In 2023, 70 percent of Israel’s tech exports were software services. Much of the rest of the trade structure is in advanced technologies critical to both nations’ militaries. Silicon Valley is one of the most significant investors in Israeli startups because of its proven track record in developing life-saving security innovations. Warren Buffett even chose Israel for Berkshire Hathaway’s first international acquisition. Google’s parent company made its largest acquisition when it acquired an Israeli cybersecurity unicorn for $32 billion in cash.

Collaboration with Israel on military technology is a congressional priority. A perfect example of this collaboration is the Iron Dome, a missile-defense system with a 90 percent interception rate within its operating parameters.

At its core, the U.S.-Israel strategic partnership recognizes that economic imperatives cannot be separated from the security realm. Our mutual enemies know this and target both aspects of US-Israel cooperation. Anti-Israel forces have a long-running strategy called Boycott, Divestment, and Sanctions, which calls for governments, universities and corporations to engage in forms of economic warfare against Israel. The goal of BDS is not the creation of a Palestinian state or any other policy concession, but the destruction of Israel. As the Anti-Defamation League puts it, BDS “doesn’t seek to create a Palestinian state but rather aims to dismantle the Jewish state and end the right to Jewish national self-determination.”

The United States has a long-term interest in defeating these efforts and ensuring that Israel maintains its qualitative military and strategic edge, which includes its economic security. President Trump has noted the United States’ significant investment in the Israeli economy through military aid, much of which is invested back into the United States. However, 17 percent tariffs could cost the small Israeli economy $2 billion to $3 billion annually. Ultimately, U.S. aid to Israel represents only 0.045 percent of the federal budget. Yet, it yields priceless benefits like resisting Iranian aggression in the Middle East and stopping rogue powers such as Iraq and Syria from acquiring nuclear weapons.

What is called for is a new economic model that recognizes America’s trade deficits but considers just how valuable this relationship is to the security and well-being of America. The U.S.-Israel partnership produces a clear windfall for the American taxpayer. Israel is strategically situated and is a small but powerful friend that largely shares our values and interests.

The United States should develop a new sort of “most favored nation” trading relationship with this critical partner — one that lowers tariffs that might harm both sides to the gain of our enemies, in favor of a more balanced partnership that strengthens both powers in a dangerous world.

Alma Hernandez is a Democratic state representative from Arizona and a first-generation Mexican-American Jew. She wrote this for InsideSources.com.