Netanyahu’s Message to Trump

Israeli Prime Minister Netanyahu will be meeting with US President Trump today to discuss the 17% tariff that the US has decided to levy on imports from Israel to the US, even though a Free Trade Agreement (FTA) has existed between Israel and the US for 41 years that eliminated virtually all Israeli tariffs on US exports.

Having said that, during the visit the Prime Minister might want to call the President’s attention to the fact that rather than the US having been ripped off by the world’s economies for the last 50 years as was stated last week, America has actually experienced unparalleled economic growth that puts a lie to the US administration’s basis for imposing the tariffs.

Some facts will illustrate this point quite well.

In 2005 the size of the US economy was $14.77 trillion as compared to the Eurozone’s $14.33 trillion.   By 2023 the US economy had grown to $27.72 trillion while Eurozone growth just hit $15.78 trillion.   In other words, the US economy grew by almost 88% while Europe’s barely broke 10% growth.  Hardly an argument for the US having been ripped off.

In 1990 the average annual wage in the US was $53,776 while the OECD average was $43,963.  By 2023 the US average annual wage had risen to $80,115 (a 49% increase) while the OECD average was just $58,232 (a 32% increase) once again showing that the US did better than the other developed economies of the world.

When it comes to personal wealth as measured by per capita GDP, in 1995 per capita personal wealth was $28,691 while in Japan it was $44,198.  But by 2023 the US figure had climbed to $82,769 (a 189% increase) while Japan’s was $33,767 (a 24% decrease).  Hardly a result that supports the theory that the US is being ripped off economically.

To get more local, the economically poorest US state, Mississippi, had a per capita GDP in 2023 of $51,355 which was larger than that of the UK ($49,464), France ($44,691) and Japan ($33,767).  Who would have thought?

So, the argument that the US is being ripped off by other countries, 68% of whom are already subject to significant US import tariffs, simply does not hold water.

In addition, it appears that the tariffs announced last week in Washington were based on trade deficits which skew the results in favor of the President’s arguments while conveniently omitting the value of “services” exported by the US, whose volume is larger than that of exported “goods.”

Our Prime Minister could close by letting the President know that given the general mutual absence of tariffs between our two countries, imposing a tariff of any kind at this point is not reciprocal but rather a fine for the right to do business with the US.  As Republican Senator Rand Paul so aptly stated in a speech last week, “tariffs simply do not make economic sense.”  Whether one agrees or not, decisions need to be based on solid facts if they are to be economically sound