Trump’s tariffs could actually benefit Israelis: Here's what to know

Israel’s recent announcement to eliminate tariffs on American goods, heralded just days ago, might not be the game-changer it seems. For over 30 years, American imports have faced virtually no tariffs, with annual collections totaling a mere $40 million, or 0.02% of trade value.

Yet, a viral thread by commentator Saul Sadka on X suggests that U.S. President Donald Trump’s proposed tariffs could shake up Israel’s economy in an unexpected way, potentially breaking local monopolies and lowering costs for consumers.

About the food monopolies:

Israel’s food market is dominated by a handful of powerful conglomerates that wield shocking influence over what consumers eat and pay, often at the expense of competition and affordability. Companies like Osem (owned by Nestlé), Tnuva, and Strauss control vast swathes of the grocery sector, everything from ketchup to dairy to snacks, relying on a web of non-tariff barriers, exclusive distribution deals, and lobbying clout to stifle imports and smaller rivals. These monopolies exploit Israel’s unique regulatory quirks while enjoying tacit government support from a system swayed by their economic heft and media advertising muscle. This means that Israeli consumers have fewer choices and emptier wallets, all while local giants rake in profits with little incentive to innovate or cut costs.

Sadka argues that Israel’s high cost of living, particularly for groceries, 50% above the OECD average (!) stems not from tariffs but from entrenched trade barriers protecting local conglomerates. These firms, often major media advertisers, lobby heavily to maintain their dominance.

The fascinating story of Osem vs Heinz's ketchup

Take ketchup, for instance: Osem, a local producer, struggles to match Heinz’s global efficiency and quality. Instead of competing on price or innovation, Sadka claims, Osem leaned on regulations, like a unique Israeli standard requiring ketchup to be labeled "tomato seasoning" to hinder imports. Similarly, small Israeli pineapple farms, facing high costs due to an unsuitable climate, are shielded from cheaper, juicier foreign fruit by non-tariff barriers, keeping prices sky-high.

Enter Trump’s tariffs. If the U.S. slaps duties on foreign goods, Israel’s tariff-free access to American products could become a golden opportunity. Savvy importers might flood the market with affordable U.S. brands like Heinz, pressuring local giants to lower prices or lose share. Sadka sees this as a win for Prime Minister Benjamin Netanyahu and the public, who could enjoy cheaper groceries, while monopolies, long insulated by government favor, might finally face real competition.

The shift wouldn’t be seamless. Local producers and their political allies could resist, and logistical hurdles remain. Still, with Trump’s policies looming, the days of overpriced ketchup and pineapples in Israel might be numbered. For consumers and deal-hunters, it’s a tantalizing prospect: a market forced to prioritize value over protectionism.

At this stage though, the direct impact of the Trump administration’s new tariff policies is that Tel Aviv Stock Exchange plummeted due to fears of a global trade wars. The TA-125 index fell 3.8%, the TA-35 index of blue-chip companies dropped 3.6%, the TA-90 index declined 4.5%, and the TA-Insurance and Financial Services index sank 4.6%. This followed a sharp decline in global markets, including a nearly 6% drop in the S&P 500 and a 5.5% fall in the Dow Jones, triggered by China’s retaliatory 34% tariff on U.S. goods in response to Trump’s tariffs on around 60 countries, as reported by Times of Israel.