Israeli trade relations collapse amid war on Gaza, global boycotts
3 Min Read
Israeli exports face severe setbacks as global clients cancel deals over the war on Gaza, fueling fears of a looming economic crisis and credit downgrade
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Activists take part in a protest against the war in the Gaza Strip, as they march along the Gaza separation barrier in southern occupied Palestine, Friday, Sept. 19, 2025 (AP)
"Israel's" trade relations are suffering a serious deterioration in recent weeks, with deals and meetings being canceled even with historically "friendly" nations, amid an atmosphere of secrecy and embarrassment.
Israeli exporters have revealed that companies in Europe and the United States have refused to renew export contracts, while marketing networks have announced a halt to the import of Israeli products "until further notice."
In this context, Ynet reported that a delegation of experts from the Moody's rating agency visited Tel Aviv and left with very worrying impressions of the possibility of a rating reduction soon. One official said, "It will be a miracle if a reduction is not made within two weeks."
A senior economic official who met with Moody's representatives pointed to extreme concern over the massive rise in defense spending during the war on Gaza, confirming it represents a critical turning point.
The official warned that the Israeli government could lose all control over budget management, threatening a huge rise in the deficit and an accumulation of debt.
Israeli trademarks take heavy blows
The president of the Israeli Manufacturers Association, Ron Tomer, confirmed that the Israeli brand has been severely damaged, warning that the economy could be set back by years. Tomer also pointed to a shocking request from a supposedly "friendly country" to erase any images of meetings with Israeli companies to avoid political embarrassment.
An exporter explained that the situation has deteriorated significantly since the announcement of the intent to occupy Gaza and with the increasing spread of videos documenting the bombing of buildings and mosques and the deaths of civilians.
The exporter added that the footage from Gaza can no longer be overlooked and that they are now destined to complete isolation and feel shunned all over the world.
71% of scrapped deals connected to war on Gaza
According to a survey prepared by the Israeli Manufacturers Association, which included 132 industrialists, nearly half of all exporters have lost deals or not had their contracts renewed, while 71% of them indicated the cancellations were for political reasons related to the war on Gaza.
The European Union was the most proactive in cancellations, as 84 percent of industrialists reported losing contracts there, while 31 percent were surprised by similar decisions from clients in the United States, according to the survey.
The survey also indicated that 76 percent of exporters have seen their exports directly harmed, with the impact exceeding 40 percent of total exports for some of them.
The survey further revealed that more than half of all new clients now refuse to deal with Israeli companies, while 49 percent of exporters are facing unprecedented logistical difficulties with shipping, customs, and ports.
Economic analyses link this crisis to the repercussions of the war on the Gaza Strip and statements by Israeli Prime Minister Benjamin Netanyahu about turning "Israel" into a closed system, which has alarmed investors over rising security expenditures and a worsening deficit.
