Israel and the US are close to signing a new tariffs agreement, a year after the introduction of President Trump’s global tariffs policy. Senior Israeli officials are due to visit the US in the next few days to meet their American opposite numbers on the matter. In the formula being drafted, Israel will buy more wheat from the US and will raise its tariff on wheat imports from Russia and Ukraine, which are currently its main sources. The Presidency of Business Organization in Israel has attacked the proposal, saying that it will harm local businesses and lead to price rises.
How will it work? The state will subsidize wheat imports from the US by NIS 60 million annually for a decade. A third of the amount will come from the Ministry of Agriculture, a third from the Ministry of Economy and Industry, and a third from the Prime Minister’s Office. Relaxations and exemptions applying to wheat imports from Russia and Ukraine will be cancelled.
On the Israeli side, the move was promoted by Minister of Agriculture Avi Dichte and Minister of Economy and Industry Nir Barkat. Minister of Finance Bezalel Smotrich opposed it, arguing that it would raise the cost of living, but Prime Minister Benjamin Netanyahu decided in favor of it. As far as is known to "Globes", Netanyahu’s argument was that Israel had given a commitment to the US and could not now withdraw it.
Not worthwhile for Israel
Israel is almost completely dependent on imports for its wheat and animal fodder supplies. The US Department of Agriculture, in a report published in April 2025, estimated that Israel’s imports that year would amount to 2.15 million tons of wheat. The report even stated that it would not be worthwhile for Israel to import wheat from the US because of the extra cost, estimated at $25 per ton in comparison with imports from the Black Sea countries, Russia and Ukraine, plus the high additional costs of importation.
Local employers are angry over the move being put together, and have raised several objections. First of all, they say that the expensive US wheat is not suitable for the flour mills in Israel. Secondly, they say that a clause in the agreement provides for a 50% increase in the tariff on animal fodder from Russia and Ukraine. They claim that the consequences will be dramatic, in the form of corresponding rises in prices of meat, chicken, and dairy products. In addition, they warn that such a significant rise in the tariff will lead to local importers trying to find ways around it and creative solutions, such as converting wheat for human consumption, on which the tariff will be lower, to animal fodder. One way or another, they claim, the Israeli public will pay more.
The connection to military aid
Earlier this week, the prime minister’s economic adviser Avi Simhon said that the details of the trade agreement had been agreed. In exchange for the deal on wheat, the US will apparently reduce tariffs on a series of Israeli products. At present, the tariff on Israeli goods reaching the US is 15%, with no exemptions.
It is believed that after the trade agreement is completed, the next stage will be the military aid agreement between the two sides. According to messages received by senior officials in Israel, the Americans are signaling that Israel cannot expect both significant relief on tariffs and continued extensive military aid as in the last agreement. Netanyahu himself spoke in a recent interview with "The Economist" of the possibility of the military aid being gradually phased out. Under the current agreement, signed with the Obama administration in 2016, Israel receives $3.3 billion annually for military procurement and a further $500 million for collaboration on air defense systems. The agreement will expire in 2028, and negotiations on a new agreement have started.
Published by Globes, Israel business news - en.globes.co.il - on January 29, 2026.
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