In light of the increasing ambiguity of the volume of American customs duties that will eventually be imposed on Israeli goods, the Israeli Ministry of Finance estimated that the drawing plan launched by US President Donald Trump will make a loss of about 0.5% of the gross domestic product during the year 2025 only, equivalent to less than 10 billion shekels ($ 2.76 billion).
Although this effect is directly from the shock that struck global trade due to the Trump plan, the Ministry of Finance believes that the losses are relatively moderate compared to other countries, including the United States itself.
An expected review of economic expectations
The Israeli Ministry of Finance is expected to publish an update of its expectations for the growth of local product by the end of May or in early June. The recent estimates, issued in October 2024, indicated a growth of 4.3% in 2025, after two years of slowdown caused by the war on Gaza.
However, the ministry had indicated before the official announcement of the Trump customs plan to the possibility of reducing expectations due to technical factors, most notably that the growth of the output in 2024 came higher than the previous negative estimates, which reduced the margin of recovery available this year.
This week, the Central Statistics Department supported the trend towards the reduction, after publishing the final number of growth in 2024, which reached 1%, which is a historical rate, albeit slightly higher than the previous estimate of 0.9%.
Fees accelerate the growth reduction
While some internal economic factors may be subject to discussion within the corridors of the Ministry of Finance, the impact of customs duties is not a subject of controversy, as the question is no longer if the expectations should be reduced, but to what extension should be reduced?
While the Bank of Israel reduced its expectations from 4% to 3.5% earlier this month, the Ministry of Finance is still adopting a more optimistic vision, and it may have a slight reduction in its expectations, to remain near 4.3%.
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International Monetary Fund reviews
In the same context, the International Monetary Fund issued an international report this week that included updated expectations for the performance of the Israeli economy, pointing to a possible growth of 3.2% in 2025, increasing its previous expectation of 2.7%, in contrast to the general trend of the report, which reduced the global expectation from 3.3% to 2.8%.
Although the report was not focused on Israel directly, it indicated that the American drawings and global trade tension have become major factors in assessing the prospects for the economy in the region.
Initial estimates indicate that the consequences of customs duties may pay the Israeli economy damage to billions of formations, especially in the export sectors that depend on the American market. These estimates come at a time when global pressure on supply chains increases, which increases the difficulty of achieving a strong economic recovery in the near term.
While government moves to confront antiquities continue to diversify markets and search for possible customs exemptions, fluctuations in American policy remain one of the most prominent sources of economic instability of Israel this year.
