It’s the Israeli economy’s ‘internal enemies,’ stupid!
Yaron Zelekha says the high cost of living, not Trump’s tariffs, which requires tackling. Oh, and Iranian nukes, of course.
By Ruthie Blum
JNS
Apr 7, 2025
Visitors stand in front of a stock market ticker screen in the lobby of the Tel Aviv Stock Exchange
Ron Tomer, head of the Manufacturers Association of Israel, wrote to Prime Minister Benjamin Netanyahu on Sunday to warn against the “severe consequences” that would result from President Donald Trump’s slated 17% tariff on Israeli exports to the United States.
Tomer wasn’t alone in his reaction to Trump’s new trade policy. Indeed, since “Liberation Day” was declared on April 2, forecasts of gloom and doom have been rampant, particularly among those whose view of Trump was already dim.
One Israeli economist who rejects the hysteria of his fellow financial analysts is Professor Yaron Zelekha. In a TV interview on Monday morning, ahead of Netanyahu’s meeting with Trump at the White House, Zelekha—head of the New Economic Party, which didn’t make it into the Knesset when it ran in the last two elections—went as far as to pooh-pooh the dire predictions.
Asked what he thinks Netanyahu aims to achieve in his talks with Trump, Zelekha told Channel 14 that the focus should be on the Iranian nuclear program and Turkey’s expansionism in Syria. The trade war, he said, “applies only marginally to Israel.”
He added that though he’d be glad if Netanyahu managed to persuade Trump to lower the tariffs imposed on Israel to 10%, the minimum he set for other countries, “either way, the effect on our economy will be negligible.”
Israel’s real problem, said Zelekha, “is its high cost of living; monopolies, exclusive importers, the banks.”
Indeed, he stressed, “The enemies of the Israeli economy are internal, not external. And the tariffs are of greater importance to a handful of industrialists than to the rest of us. Whether tariffs are raised or lowered isn’t what will change the Israeli economy.”
Why, then, are economists complaining about an imminent global recession that will affect every Israeli’s pocket?
“Part of the discussion going on stems from the political slant of the international media against Trump,” said Zelekha. “Some is emanating from parties, such as investment banks, with a hidden interest.”
As for the decline in the stock market, Zelekha claimed that most of it has nothing to do with the trade war.
“It’s actually because of the realization of earnings,” he said, “due to the price of stocks having swelled in the past two years to an unrealistic level. The NASDAQ, for instance, which dipped 10,000 points, had soared by more than 20,000 prior to the presidential election. So, the dip in the stock market was not only to be expected; it’s healthy for the economy, since it’s not healthy for stocks to swell without any economic basis.”
Zelekha suggested that critics are hitching a ride on Trump’s tariffs in order to cast blame where it doesn’t belong.
While conceding that there will be an adjustment period in the near future, he expressed certainty that “by as early as next year, the American economy will strengthen. The United States has actually been subsidizing the world by enabling imports from everywhere to enter the country without restriction, while others don’t reciprocate.”
What Trump is doing now, he stated, “is taking advantage of America’s strength, and rightly so, to create equitable trade conditions. The U.S. doesn’t have to be the patsy of the world, certainly not of the wealthy European Union, nor of China, which poses a geopolitical danger to America.”
Trump, he concluded, is making a wise move. “And he’s doing it with the determination and aggressiveness that characterize him.”
It remains to be seen whether Netanyahu will come to a compromise with Trump over the tariffs. If Zelekha is correct that it won’t make much of a difference one way or the other, the two leaders would do better to invest their energy in tackling the concrete and immediate threats to Israel’s survival.
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