"Israel" is in discussions with its key sponsor, the United States, to ease tariffs imposed by President Donald Trump as part of a wide-ranging global trade action.

Trump’s sweeping “Liberation Day” tariffs, announced this week, targeted both allies and adversaries. The move came just one day after "Israel" eliminated its remaining customs duties on American imports. Israeli goods were hit with a 17 percent tariff, one of the tougher penalties among US trade partners.

"The Ministry of Finance is maintaining an ongoing dialogue with the US administration with the aim of reducing the scope of the tariffs and reducing their impact on Israeli industry," far-right Finance Minister Bezalel Smotrich wrote Thursday on X.

Smotrich had met with his American counterpart, Scott Bessent, during a visit to Washington in March. On Tuesday, he announced the removal of all remaining Israeli tariffs on American products, which had still applied to about one percent of US goods.

The Israeli government has come under fire for lifting its own duties shortly before Trump’s announcement.  

"Smotrich rushed to remove all tariffs on imports from the US to Israel, and in response received 17 percent tariffs on imports of goods from Israel to the US. Genius," opposition lawmaker Vladimir Beliak posted on X.

The Manufacturers Association of Israel (MAI) said the US tariff move caught them off guard.  

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"It appears that the imposition of the customs duty is probably related to the US trade deficit with Israel," the organization said in a statement.

In a follow-up statement Thursday, the MAI warned that the tariffs represent “a major challenge” to the occupation's economy and noted it is working with both US and Israeli authorities “in order to guarantee Israel's exemption and/or reduce the taxes imposed.”

Tariffs hit as Israeli economy plunges

Moody’s Investors Service warned of "Israel’s" “very high political risks that have weakened economic and fiscal strength," Israeli media reported.

Moody’s said in a regular update report on the occupation entity’s credit rating that “uncertainty over Israel’s longer-term security and economic growth prospects is much higher than is typical, with risks to the high-tech sector particularly relevant, given its important role as a driver of economic growth and significant contributor to the government’s tax take."

The report noted that these negative developments could significantly impact the government’s finances and lead to further deterioration in institutional quality.

The Jerusalem Post reported on February 11 that "Israel's" economy continued to struggle in the second half of 2024, as its war on Gaza deepened financial instability and eroded investor confidence. According to the Bank of Israel's latest financial stability report, macroeconomic risks remain high despite minor improvements in credit and asset pricing.

The central bank's risk assessment, which evaluates the exposure of "Israel's" financial system to macroeconomic challenges, found that economic instability persisted due to the security situation. The report pointed to the war's impact on global perceptions of "Israel's" economy, affecting businesses, government finances, and borrowing costs.

The observations align with projections from the International Monetary Fund (IMF), which recently revised "Israel's" 2024 GDP growth forecast down to 0.7%, citing regional conflicts and heightened uncertainty as major concerns.

Despite a somewhat modest GDP growth following a contraction at the end of 2023, "Israel's" economy has yet to regain its expected trajectory.