Prime Minister Netanyahu arrived in the U.S. yesterday for a recently announced meeting with President Trump, perhaps to discuss the 17-percent tariff that the White House imposed last week on goods imported from Israel. Hoping to preempt such a levy, the Israeli Finance Ministry had ended all tariffs on American imports, which had only applied to 2 percent of all goods. Steven Terner offers a preliminary evaluation of the likely effects of the new taxation scheme:

In 2024, Israel exported $17 billion worth of goods to the United States, its closest ally and largest trading partner. Assuming that the tariffs are imposed only on goods, and not services, the move will considerably weaken a number of Israeli industries.

For instance, the U.S. is a crucial market and investor base for Israel’s high-tech sector. Tariffs could dampen growth and investment. Although U.S.-Israel defense cooperation is strong, tariffs on defense-related products could disrupt supply chains. Additionally, higher costs may push U.S. buyers toward alternative suppliers. In particular, Israel can be expected to lose significant business exporting diamonds, machinery, and electrical and medical equipment to the United States

In the near term, a drop in exports can be expected to weaken the Israeli shekel, and higher costs for imports could increase inflation. Considering the toll that the prolonged war has taken on the Israeli economy, Israelis can hardly afford a further hike in inflation. The tariffs themselves complicate American-Israeli trade relations and push Israel to seek new trade deals or to expand existing ones with Europe, China, and India to compensate.

With the IDF engaged in ground maneuvers in both northern and southern Gaza, and a plan about to go into effect next week that would separate more than 100,000 civilians from Hamas’s control, an end to the war may at last be in sight. Yet there seems to be no agreement within Israel, or without, about what should become of the territory. Efraim Inbar assesses the various proposals, from Donald Trump’s plan to remove the population entirely, to the Israeli far-right’s desire to settle the Strip with Jews, to the internationally supported proposal to place Gaza under the control of the Palestinian Authority (PA)—and exposes the fatal flaws of each. He therefore tries to reframe the problem:

[M]any Arab states have failed to establish a monopoly on the use of force within their borders. Syria, Lebanon, Iraq, Yemen, Libya, and Sudan all suffer from civil wars or armed militias that do not obey the central government.

Perhaps Israel needs to get used to the idea that in the absence of an entity willing to take Gaza under its wing, chaos will prevail there. This is less terrible than people may think. Chaos would allow Israel to establish buffer zones along the Gaza border without interference. Any entity controlling Gaza would oppose such measures and would resist necessary Israeli measures to reduce terrorism. Chaos may also encourage emigration.

Israel is doomed to live with bad neighbors for the foreseeable future. There is no way to ensure zero terrorism. Israel should avoid adopting a policy of containment and should constantly “mow the grass” to minimize the chances of a major threat emerging across the border. Periodic conflicts may be necessary. If the Jews want a state in their homeland, they need to internalize that Israel will have to live by the sword for many more years.