Hiring freezes, impacts on exports: Israeli companies prepare for Trump's tariffs

Heads of Israeli companies braced for the impacts of sweeping tariffs announced by the Trump administration Wednesday, with some enacting temporary non-critical hiring freezes, and others reconsidering strategic business plans.

US President Donald Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country’s biggest trading partners, in a move that ratchets up a trade war that he kicked off on his return to the White House.

The new policy includes a 17% tariff on Israeli goods exports.

Hiring freezes begin

“From our recent conversations with Israeli high-tech CEOs and entrepreneurs, a recurring pattern has emerged. The first companies affected or shifting into a reassessment mode are manufacturing companies,” said Inbal Haresh, the CEO of Gifthead.

Horesh added that she is seeing “slight movement” among companies, with manufacturing companies “entering a state of ‘cautious waiting’—a temporary freeze on non-critical hiring and [making] an effort to understand the implications before making new decisions.”

Haresh added that she is seeing “slight movement” among companies, with manufacturing companies “entering a state of ‘cautious waiting’—a temporary freeze on non-critical hiring and [making] an effort to understand the implications before making new decisions.”

Horesh stressed that this is “not a moment for panic” but a time to “build action plans with several backup scenarios.”

Tom Koren, the CEO of Exelera, a subsea cable and digital infrastructure provider, said that he does not anticipate a significant impact on Israeli exporters.

“Many businesses have likely already accounted for tariff increases in their risk assessments, meaning that companies currently operating in the US market will not see drastic changes,” he said.

Nimrod Zvik, the CEO of Marom – Project 360, said that the tariffs and their consequences may affect Israel’s construction and real estate markets.

Key Israeli construction and infrastructure companies who provide technological solutions in these industries all operate in the US, he explained, saying that they now face new challenges posed by the tariffs.

“The increased tariffs are expected to hurt the profit margins of these companies, complicate exports, and make American projects that were once profitable less viable.”

There is also a concern that the tariffs could slow technological developments, delay investments, and reduce competition, he said, adding that these “could affect innovation levels, supply chain timelines, and construction costs in Israel.”

ASSA DRORI, the chief risk solutions officer at Okoora, said that the tariffs will “reduce the attractiveness of exporting goods from Israel to the US, as many other economic competitor countries face lower tariff rates than Israel.”

“Additionally, the imposition of tariffs is expected to strengthen the dollar against the shekel in the medium term, leading to price increases in Israel and making it more difficult for the Bank of Israel to lower interest rates.”

“Fortunately, most of Israel’s exports to the US consist of services –  some 62% of total exports in 2024, mainly from the hi-tech sector – which are not subject to tariffs,” Drori added.

This means that the impact on this sector will be minimal, he said.CPA Dafna Ravid-Barzily, managing partner at Barzily & Co., said that Israel’s cancellation of tariffs on US goods this week, as part of an attempt to prevent US tariffs on Israel, may create more competition for Israeli wineries and potato growers.

A “bigger impact, though indirect, may come from the influence of the American move on the global economy,” she added.

If the tariffs lead to a trade war, economists predict that growth will slump globally, she said. “Should this happen, Israel may be facing recession; for a country already burdened with the cost of a prolonged war, such recession will be hurtful.”

Mike Ehrenstein, who heads the American law firm Ehrenstein|Sager, said that Israeli businesses should “pause before panic,” saying that the policy may not survive the week.

“Prime Minister Netanyahu has already pledged to eliminate all levies on American goods. If reciprocity matters – and it often does – this unilateral move could prompt a reversal or suspension of the tariff,” he added.

He also said that serious legal questions exist regarding the tariffs.

“The US-Israel Free Trade Agreement, signed in 1985, was America’s first bilateral trade pact. It remains in force and provides duty-free treatment on most goods. Imposing new tariffs by executive fiat may conflict with treaty obligations,” he explained.

While he called the move a “trade skirmish” rather than a “trade war,” he said that Israeli businesses should plan for every outcome “because even political theater can have real economic consequences.”

Erez Menashe, CEO of Crown Neuromarketing, said that the decision has led to concerns for his client companies in the US and impacted their strategic business decision.

Decreased foreign demand, higher import costs

“Some are reconsidering whether to open branches in the US or instead focus solely on the EMEA (Europe, the Middle East and Africa) region, distancing themselves from the American market,” he said.

Dani Britman, the CEO of Bmeniv Investment House and Bmeniv Finance College, said that he is “seeing an immediate reaction in the financial markets – sharp declines in stock indices, especially for companies highly sensitive to international trade and cyclical economies.”

He added that while it does not seem to be causing a “severe slowdown” at this point, “there will be effects, primarily through decreased foreign demand and higher import costs.”

“There are no winners in trade wars – only losers. The primary risk is a wave of uncertainty, a slowdown in business activity, inflationary pressure, and the potential for a recession. All of these put pressure on the capital market in the short term,” he added.

Reuters contributed to this report.