Israel has moved to remove all remaining tariffs on imports from the United States, officials announced Tuesday, according to Reuters. The decision comes just one day before the Trump administration is set to impose reciprocal levies on global trading partners.

The measure still requires final approval from Economy Minister Nir Barkat and parliament's finance committee, but both are expected to support the action.

"The removal of tariffs on American goods is another step to open the market to competition, to diversify the economy, and to lower the cost of living," Prime Minister Benjamin Netanyahu said in a joint statement with Barkat and Finance Minister Bezalel Smotrich.

Israel and the US established a free trade agreement 40 years ago, with approximately 98% of American goods already entering Israel tax-free. The finance ministry noted that tariff collection from US imports – primarily in the agricultural sector – amounts to about 42 million shekels ($11.3 million) annually.

The United States represents Israel's largest trading partner and closest ally, with bilateral trade reaching $34 billion in 2024.

Finance Minister Smotrich had urged ministers to coordinate with US counterparts quickly to implement the tariff relief, noting the move is "a significant step in safeguarding the Israeli economy during a sensitive period and strengthening economic ties with our most important ally."

Israel's Agriculture Ministry indicated it might compensate local farmers if Trump's tariff policies negatively impact the domestic agricultural sector.

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The Houthis created significant concerns in Israel's economic system. Their control over the Gulf of Aden and the Bab el-Mandeb Strait threatened one of Israel's main shipping routes through the Red Sea and Suez Canal. Houthi attacks on merchant vessels led to the diversion of international shipping to a longer route, circumnavigating Africa via the Cape of Good Hope. In Israel, there were fears of dramatic effects on our global trade that would lead to price increases for many products.

This concern was certainly well-founded. Rising shipping costs during the COVID-19 crisis were a major factor in the global increase in consumer product prices. The blocking of the Suez Canal between 1967 and 1975 also caused significant damage to Israel's international trade and economic growth.

However, a new study by the Bank of Israel, conducted by Haggay Etkes and Nitzan Feldman, shows that the Houthis' impact was relatively limited. From the start, only about 5% of Israeli exports are shipped by sea to Asia and Oceania, and about 20% of civilian imports to Israel. The analysis revealed that total Israeli imports from Asia and Oceania did not decline unusually following the Houthi attacks. Import prices to Israel also did not rise significantly, partly because maritime shipping costs are a small portion of the merchandise price, so their impact on the final price is minimal.

The Houthi attacks in the Red Sea didn't only affect Israeli vessels or those bound for Israel but impacted global maritime transport worldwide. Other Mediterranean countries actually felt the impact of these attacks more strongly. Imports in countries like Greece, Turkey, Italy, France, and Spain declined for six months due to Houthi attacks but managed to recover by the spring of 2024. The diversion of shipping routes initially raised transport costs, but this increase moderated within several months. Ironically, Israel, which was the declared target of Houthi attacks, showed reduced impact compared to other Mediterranean coastal nations.

It's no wonder the Houthis themselves are beginning to worry. The Shiite axis is crumbling across the Middle East, and their harmful influence on a major maritime trade route is weakening as the world finds alternative solutions and demonstrates flexibility in shipping routes. The Houthis remain alone in the broader Iranian campaign, where they weren't the strongest player to begin with. This week, the US and Britain attacked a Houthi facility in Sanaa, and later, Israel also struck several targets in Yemen, while the emerging Trump administration is not expected to treat them favorably.

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The abrupt resignation of Canada's Finance Minister Chrystia Freeland on Monday has plunged Prime Minister Justin Trudeau's government into crisis, just weeks before Donald Trump's return to power in the United States threatens new tariffs on Canadian exports, according to Reuters and POLITICO reports.

Freeland, who also served as deputy prime minister, quit after Trudeau attempted to demote her position. In a blunt resignation letter posted on X, she criticized the prime minister's spending plans, warning they could weaken Canada's ability to withstand potential damage from Trump's threatened tariffs.

"You and I have found ourselves at odds," Freeland wrote in her resignation letter, characterizing Trump's "aggressive economic nationalism" as "a grave challenge" while criticizing Trudeau's "costly political gimmicks which we can ill afford."

The political upheaval comes at a critical time for Canada-US relations. Freeland had previously headed a special cabinet committee on Canada-US relations and played a key role in renegotiating the North American free trade agreement during Trump's first term.

"As a country we have to project strength and unity, and it's chaos right now up in Ottawa," Ontario Premier Doug Ford said after a scheduled online conference call of provincial premiers on Monday to discuss the US threat.

Alberta Premier Danielle Smith expressed similar concerns, noting that provincial leaders only learned of the resignation of their point person on Canada-US relations midway through their call. "It's chaos. I'd be looking at this and wondering who the next leader is. Are they going to be able to bring forward a coherent plan?" she said.

The role of chief federal coordinator on US relations now passes to Dominic LeBlanc, the new finance minister, who recently accompanied Trudeau to Florida to meet Trump.

Trump, who had previously expressed displeasure with Freeland during the 2018 trade negotiations, celebrated her departure. "Her behavior was totally toxic, and not at all conducive to making deals which are good for the very unhappy citizens of Canada. She will not be missed!!!" he wrote on his social media platform.

The Great State of Canada is stunned as the Finance Minister resigns, or was fired, from her position by Governor Justin Trudeau. Her behavior was totally toxic, and not at all conducive to making deals which are good for the very unhappy citizens of Canada. She will not be…

— Donald J. Trump Posts From His Truth Social (@TrumpDailyPosts) December 17, 2024

 The political uncertainty comes as Trudeau's Liberal Party trails badly in polls ahead of an election that must be held by late October 2025. Some unhappy Liberal legislators, who have been calling for Trudeau's resignation for months, met Monday in Ottawa to voice their frustration.

Vincent Rigby, a former national security and intelligence adviser to Trudeau, said Freeland's departure meant the Canadian stance with Trump was up in the air.

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Prime Minister Benjamin Netanyahu said on Friday he wanted to export gas to Europe via Italy, telling his Italian counterpart Giorgia Meloni there was room for much greater cooperation between the two countries.

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Netanyahu spent three days in Rome, meeting political and business leaders.

In a brief statement following talks with Meloni, Netanyahu made no mention of the mass protests back home over a contested judicial reform or the surprise announcement that Saudi Arabia was resuming diplomatic ties with Israel's arch-enemy Iran.

Video: Reuters

Instead, he offered to forge deeper ties with Italy in an array of sectors, including water, cybersecurity and energy.

"Italy has said it wants to be a hub for the supply of energy for Europe. We think exactly that and we have gas reserves that we are now exporting and we would like to expedite more gas exports to Europe through Italy," he said.

Italy is committed to replacing its imports of energy from Russia in the wake of Moscow's invasion of Ukraine last year and wants to take advantage of this to become a major transporter of gas from North Africa and the Mediterranean.

Israel signed an initial agreement in November with Eni ENI.MI and TotalEnergies TTEF.PA that allows the energy companies to start exploring for natural gas within the framework of a landmark maritime border deal with Lebanon.

"There is now a participation of Eni in our gas projects, but we think we can carry it to a much higher level," Netanyahu said. He added that Italian and Israeli ministers would meet in Israel in the coming months for bilateral talks.

"(We) will address perhaps a dozen areas of mutual cooperation to the benefit of Italy and Israel alike," he said.

In a newspaper interview ahead of his trip to Rome, Netanyahu said he would ask Meloni to recognize Jerusalem as the capital of Israel. Neither he nor Meloni mentioned this issue on Friday.

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Prime Minister Naftali Bennett met Monday with Crown Prince of the United Arab Emirates Mohamed bin Zayed in Abu Dhabi, the first meeting the two leaders have held.

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Upon landing in Abu Dhabi, Bennett was greeted by an honor guard and Emirati Foreign Minister Abdullah bin Zayed.

"I appreciate your warm welcome," Bennett said, adding that he was "very excited" to be there on his first visit as the leader of Israel.

In an interview to the official Emirati news outlet WAM published Monday, Bennett said, "The message that I wish to deliver to the UAE leaders and Emirati citizens is that mutual partnership and friendship are natural … The period since the signing of the Abraham Accords is the best evidence that developing bilateral relations is a precious treasure for us and the entire region."

"The values of tolerance, peace and dialogue are common, and that is why the friendship that unites us developed at such a high speed," Bennett said.

Bennett told WAM that the accords provided a "new, deep and solid structure for diplomatic, economic and cultural relations" in the region.

"In my opinion, this is the peace and the new reality this region is witnessing, and we are working together to ensure a better future for our children," Bennett said.

Bennett said that Israeli-Emirati relations have strengthened in all sectors, with many agreements signed for cooperation in trade, research and development, cybersecurity, health, education, aviation and more.

"I look forward to the continued development and consolidation of relations," the prime minister said.

In his meeting with the crown prince, Bennett expected to present information about the deployment of pro-Iranian militias and drone units recently discovered by the Israeli intelligence apparatus.

High-ranking Israeli officials say that the information will be presented in an attempt to keep the UAE from moving closer to Iran.

Bennett and bin Zayed were also expected to discuss additional cooperation in the fields of trade, tourism, and a number of diplomatic and security issues. Some Israeli officials are worried that the Emiratis will step up pressure for Israel to sell them its Iron Dome and David's Sling defense systems, in a deal that could be worth billions.

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German Chancellor Angela Merkel, who arrived in Israel late Saturday for a final visit before she leaves office, met with Prime Minister Naftali Bennett on Sunday.

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Bennett told Merkel that Israel's ties with Germany, under Merkel as chancellor, had become "stronger than ever."

"Thank you, Angela," Bennett said.

The prime minister said that Israel valued its friendship with Merkel and her commitment to Israel.

"Sometimes a leader makes a major difference, and I think that your leadership paved the way to Germany's ongoing commitment to Israel's security. We remember the history, and are looking forward with optimism to a better future," Bennett said.

Video: Reuters

Bennett said that the issue of Iran's nuclear program had reached a stage that "demands leadership," and said that if the free world accepted Iran reaching the nuclear threshold, it would be a "moral stain" as well as a threat to world peace.

"Imagine the damage Iran would cause if the world knew that it had a nuclear weapon behind its bullying," Bennett said.

Bennett said there was no point in trying to pacify Iran, as Tehran continued to "toy with" the international community and play for time while challenging regional stability.

"This is a critical point in time, and Germany's position is crucial. In Israel, we are taking action and operating against Iran in every dimension – including daily actions to stop it flooding our region with weapons," the prime minister said.

Merkel said that every day that passed without Tehran responding to US overtures would result in Iran enriching more uranium.

Speaking during a visit to Israel, the outgoing chancellor said that Russian President Vladimir Putin and Chinese President Xi Jinping also had a responsibility to help to push Iran back to the negotiating table.

"I also see a responsibility for Russia and China here, since if the JCPOA (nuclear deal) is no longer doing what it's meant to do then that's very difficult, so we are now in very decisive weeks for this deal," Merkel said.

Germany's ambassador to Israel, Susanne Wasum-Rainer, tweeted that the visit aims to "strengthen our unique" relationship.

In power since 2005, Merkel boosted cooperation with Israel that Germany became Israel's largest trade partner in Europe. In a 2008 trip marking Israel's 60th anniversary, Merkel addressed the Israeli parliament, in German, and expressed shame over the Holocaust. The 20-minute speech earned Merkel a standing ovation.

But Germany, like much of Europe, was at odds with Israel when it comes to the Palestinian issue. Germany has called for a Palestinian state alongside Israel and opposes Israel's settlement activities in the West Bank.

Merkel also visited Yad Vashem Holocaust memorial in Jerusalem and met with President Isaac Herzog, who praised her as "one of the most important leaders of the modern era."

Herzog surprised Merkel by announcing a special scholarship named after her, which would go to aspiring female researchers at the Weizmann Institute of Science. Merkel was then scheduled to meet with business and high-tech representatives.

Merkel will also be presented with an honorary doctorate from the Technion-Israel Institute of Technology at a ceremony in Jerusalem. Merkel, who has a doctorate in natural sciences, published a number of papers on quantum chemistry before entering German politics.

The two-day visit was supposed to take place in August, but was postponed after the developments in Afghanistan where the United States Europe scrambled to evacuate personnel and allies from the country as it Taliban took over.

Merkel last visited Israel in 2018.

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Israel and the United Arab Emirates, which normalized relations a year ago, are looking to Dubai's Expo world fair in October to boost bilateral trade, which now stands at around $712 million.

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While the figure, contained in Israeli data, is tiny compared to UAE exports of $24 billion in 2019 to its top destination Saudi Arabia, the Israeli government sees trade with the UAE rising to $1 billion by the end of 2021.

Israel is aiming for $3 billion in three years, it said this week on its Arabic-language Twitter account.

The UAE, which in a seismic move last August became the first Gulf state to normalize ties with Israel, promoted the accord's economic benefits.

In September, the UAE and Bahrain both inked US-brokered deals to establish ties with Israel, followed by Sudan and Morocco.

The bulk of trade between the UAE and Israel, which have similar GDPs of around $400 billion, has involved imports from the Gulf's dominant logistics and re-export hub, including plastics, electronics, auto parts and gems.

Israel recorded $457 million of imports from the UAE between January 2020 and June this year, and $255 million in exports to the UAE, its Central Bureau of Statistics said.

Dubai, which contains the region's largest transhipment port at Jebel Ali, said in January that bilateral trade since September 2020 stood at $272 million.

Zeev Lavie of the Israeli Chambers of Commerce (FICC) said normalization had expanded Israeli trade within the wider Middle East via the UAE. "We're becoming much more regional," he said.

Israel has traditionally exported to Arab countries via other states, or through complex structures outside the region.

Lavie said the UAE pact was encouraging trade with Egypt and Jordan, with which Israel has had peace deals for decades.

"A lot of the business community in those countries have seen that, no, it's okay to do business in Israel ... We've seen much more interest from business people," he said.

The outgoing head of mission at the Israeli embassy in the UAE, Eitan Na'eh, said quite a few agreements were to be signed in coming months, with a series of ministers visiting Dubai Expo 2020, the world fair opening in October after a one-year pandemic delay.

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"We need to really get down to work on institutional relationships between our financial institutions, the banks, the funds, the big business," Na'eh told Reuters.

Abdulla Baqer of the UAE-Israel Business Council expects major deals on logistics, medicine and start-up incubation this year.

Israel has said it plans to open an economic attaché office in Abu Dhabi this summer, and the UAE and Israel have been discussing a Free Trade Agreement.

To date, 10 government-to-government agreements have been signed between the two countries including double taxation, visas, financial services and money laundering agreements.

Publicly announced deals include around 40 memorandums of understanding and around 30 other types of strategic, cooperation or distribution agreements related to the financial, energy, sports, agriculture, aviation, aerospace and media sectors as well as investment promotion and COVID-19 technology.

But a $3 billion fund announced by the US, Israel and the UAE to encourage private-sector investment and regional cooperation has gone quiet, as has a $10 billion fund of UAE private and state money announced in March to invest in Israeli strategic sectors.

"It takes some time for trade links to be established and the pandemic almost certainly complicated this," Jan Friederich, Senior Director at Fitch Ratings said.

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Israel's diamond industry is recovering from the coronavirus pandemic exceptionally well, a report published Tuesday by the Economy Ministry revealed.

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According to ministry data, the first quarter of 2021 saw a significant increase in all four categories of the diamond trade.

Rough diamond import totaled $476 million, a 75% increase compared to the same period of time the year before. March alone saw an 87% increase compared to the same month in 2020.

Rough diamond export totaled $390 million, a 66% increase compared to last year, with a 260% increase in March.

Polished diamond import totaled $647 million, an increase of about 61% compared to the year before, with a 250% increase in March.

Polished diamond export totaled $828 million, an 11.5% increase compared to the first quarter of 2020. March saw an increase of 385%.

The normalization of ties between Israel and the United Arab Emirates also brought new sparkle to the trade. Rough diamond export to the UAE totaled $56 million, which makes up 14% of Israel's total rough diamond export in the first quarter.

Rough diamond imports from the UAE to Israel totaled $38 million, which constitutes 8% of all rough diamond imports into Israel in the first quarter of 2021.

There was no direct diamond trade yet between the Jewish state and the Emirates in the first quarter of 2020, considered the Middle East's two main diamond centers, as the Abraham Accords were reached in the summer of that year.

"There's cause for optimism after what was a difficult year for the diamond industry," Ofir Gur, head of the Economy Ministry's diamond and jewelry administration, said.

"Data from the global diamond industry and specifically the American and Chinese diamond and jewelry markets in recent months indicate a rapid recovery. We estimate that just like the first quarter of this year, the second one is expected to be favorable for the industry as well, if there'll be no surprises. "

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Prime Minister Benjamin Netanyahu welcomed the members of the delegation.

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"Today, we are making history in a way that will stand for generations. This is the first-ever official visit from the United Arab Emirates to Israel. We are signing four agreements that will make a tangible difference for our peoples," he said.

"Jews and Arabs are the descendants of Abraham, after whom this agreement is named," Netanyahu said.

The deals signed on Tuesday included agreements to protect investments and help entrepreneurs; cooperation in science and technology; direct flights between Israel and the UAE; and a bilateral visa waiver.

"Peace will not remain on paper only. We are already seeing some of its fruits. It will lead to significant expansion of tourism and business between these countries. An agreement will be signed for 10 flights a week. We will go to them, and they will come to us. This will also make flights cheaper for Israelis," the prime minister added.

LIVE! Prime Minister Benjamin Netanyahu hosts a trilateral summit meeting with the participation of US Secretary of the Treasury Steven Mnuchin and United Arab Emirates Minister of State for Financial Affairs Obaid Humaid Al Tayer. https://t.co/4PALW8Zyoo

— PM of Israel (@IsraeliPM) October 20, 2020

The delegation, which took off from Abu Dhabi, is being led by Emirati Financial Affairs Minister Obaid Humaid Al Tayer, as well as the Emirates' Economy Minister Abdulla bin Touq Al Mari. The entourage includes dozens of government functionaries and journalists.

The visit is slated to be a short one due to the COVID-19 epidemic in Israel, and last only some five hours. Several bilateral agreements were signed at a table set up on the tarmac itself, after which the representatives moved indoors for the scheduled sit-down meetings.

The delegation took off for Israel the day after the UAE cabinet approved the agreement to establish full diplomatic relations with Israel that was signed in Washington last month. The UAE and fellow Gulf state Bahrain in September became the first Arab states in a quarter of a century to sign agreements to establish formal ties with Israel.

A cabinet statement said the Abraham Accord would be "an avenue of peace and stability to support the ambitions of the region's people and enhance efforts for prosperity and advancement, especially as it paves the way for deepening economic, culture and knowledge ties."

Israel ratified the deal in a cabinet vote and a Knesset vote last week.

Also on Monday, the first commercial passenger flight from the UAE to Israel landed in Tel Aviv. Etihad Airways Flight No. 9607 took off from Abu Dhabi early Monday and arrived at Ben-Gurion Airport shortly after 7 a.m.

Later Monday, the Etihad aircraft departed for Abu Dhabi, carrying members of an Israeli travel and tourism delegation.

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Israel and the UAE signed a normalization deal on Sept. 15, forging formal diplomatic ties. Several commercial agreements have been signed between the two countries since mid-August, when they first agreed to normalize relations.

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"There is a preliminary agreement between both countries to start negotiations with Israel on a Double Taxation Avoidance Agreement soon," the UAE finance ministry said in a statement, citing undersecretary Younis Haji Al Khoori.

"The Ministry of Finance is keen to expand its international relations network by signing double taxation avoidance agreements and agreements to protect and encourage investments," Khoori said.

Such tax treaties help prevent similar taxes being imposed by two countries on the same taxpayer and are aimed at encouraging the exchange of goods, services and capital.

The UAE has around 100 double taxation agreements with most of its trade partners.

"The first round of negotiations on an agreement to protect and encourage investment confirms the two countries' efforts to build investment partnerships in various fields," said Khoori.

In a speech to the Knesset ahead of a vote on Thursday that ratified the normalization accord with the UAE, Foreign Minister Gabi Ashkenazi said Abu Dhabi was expected to send its first official delegation to Israel next week.

A source briefed on the planning said the delegation would arrive on Tuesday, Oct. 20. The UAE has yet to confirm this.

Ashkenazi said agreements were being prepared that would enable direct flights by Israeli airlines to the UAE and the opening of new markets for Israeli technology, as well as the establishment of official Israeli representative offices in the Gulf.

"I hope we will be able to sign some [of those agreements] next week and that we will soon see tourists and business people visiting both countries and touring the streets of Abu Dhabi and the beach, as well as in Jerusalem, our capital, the beaches of Tel Aviv and throughout the State of Israel."

Abu Dhabi's national airline, Etihad Airways, meanwhile launched a Hebrew-language ticket sales site.

At this stage, it is not yet possible to purchase tickets from Ben-Gurion International Airport, although according to Kan 11 News, this will likely be possible as early as the middle of next week.

In another bit of history Thursday evening, an Etihad passenger plane passed over Israel on its way from Milan to Abu Dhabi.

As a reminder, Tal Aviation, which represents several international airlines in Israel, signed a cooperation deal with Etihad earlier this week that will enable Israelis to fly on the airline with connections in Jordan, Turkey or Greece.

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