Tel Aviv stocks plunge again amid Trump tariff fears

By Al Mayadeen English
Source: Israeli media
Today 13:14

The market turmoil was further exacerbated by the renewed Israeli military offensive in Gaza and mounting internal political unrest.

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In this photo taken with a long exposure, traffic moves slowly in Tel Aviv, on Wednesday, August 14, 2024. (AP)

Shares on the Tel Aviv Stock Exchange dropped for a second consecutive day as concerns over a global trade war escalated following the Trump administration’s new tariff policy.

The benchmark TA-125 index fell 3.1%, adding to Sunday’s 3.8% drop. The TA-35 index of blue-chip companies decreased by 2.8%, while the TA-90 index, tracking the highest-capitalized shares not in the TA-35, slid 3.6%. The TA-Insurance and Financial Services index plunged 4.2%.

Tel Aviv’s sharp decline followed a continued drop in stocks across Asia and Europe. On Friday, the US S&P index fell nearly 6%, marking its biggest decline since June 2020, while the Dow Jones Industrial Average dropped 5.5%.

This came shortly after the TA-125 benchmark index plummeted 3.8% on Sunday after already slipping 0.4% the previous week. The TA-35 index, comprising blue-chip companies, dropped 3.6%, while the TA-90—which tracks high-cap stocks not included in the TA-35—fell nearly 4.5%. The TA-Insurance and Financial Services index suffered the steepest decline, plunging 4.6%.

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The steep sell-off followed Friday’s sharp downturn on Wall Street, where the S&P 500 shed nearly 6%—its worst one-day loss since June 2020—and the Dow Jones Industrial Average slid 5.5%. The rout came as China hit back at Washington with a 34% tariff on US imports, retaliating against Trump’s sweeping new tariffs affecting around 60 countries.

“The tariff plan presented by Trump, which was published on Wednesday evening, led to declines on Thursday on all world markets, including Israel,” the Tel Aviv Stock Exchange said in a statement. It added that “trading in the domestic market was characterized by volatility against the backdrop of the return to fighting in Gaza and internal political developments.”

The combination of global trade tensions, regional instability, and internal political uncertainty has fueled investor pessimism, sending shockwaves through Israeli markets.

It is worth noting that "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." Israeli Prime Minister Benjamin Netanyahu landed in Washington on Monday for high-level talks with US President Donald Trump, aiming to secure exemptions from the newly imposed American tariffs on Israeli goods.

'Israel' discusses tariff relief with US, warns of economic downturn

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.

"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.”