Israel’s economy, already strained by the immense cost of a nearly two-year war, is facing a new and significant threat from its largest trading partner. The European Union has proposed imposing substantial tariffs on Israeli goods, a move that could disrupt a €15.9 billion trade relationship and add considerable financial pressure on the nation.
The proposal would suspend preferential trade terms for 37% of Israeli goods imported into the EU, slapping them with tariffs ranging from 8% to 40%. This would generate an estimated €230 million in duties, directly impacting Israeli exporters who have long relied on duty-free access to the vast European market. The EU is also planning to immediately suspend €32 million in other bilateral funds.
This economic pressure is a deliberate strategy by the EU to influence Israel’s conduct in the Gaza war. Officials in Brussels believe that targeting Israel’s economic stability may succeed where diplomatic appeals have failed. The measures are presented as a direct consequence of Israel allegedly violating the human rights clause within its trade agreement with the bloc.
The timing is critical, as Israel is already grappling with the economic fallout of the conflict, including massive defense spending, labor shortages due to reservist call-ups, and a decline in tourism and investment. The addition of EU tariffs could exacerbate these challenges, potentially affecting everything from agricultural products to manufactured goods.
While Israeli leaders have projected confidence and vowed not to be swayed by economic threats, the business community may view the situation with greater alarm. The ultimate impact will depend on whether the EU can achieve the internal unity needed to approve the measures and how resilient the Israeli economy proves to be in the face of this new challenge.