Breaking Update
Finance Minister Halts Huge Aluminum Tax
Israel's Finance Minister blocked a steep 34%-105% aluminum tax on Chinese imports, averting a 23,000-ton shortage for the construction and housing market.
Here is the situation and the considerations for the decision:
A Problematic Recommendation at a Critical Time
The Supervisor of Trade Levies at the Ministry of Economy and the Advisory Committee recommended imposing an unprecedented levy of 34% to 105% on aluminum imports from China for 5 years, claiming “dumping” that harms local industry.
The recommendation was based on data from 2023 – a year of war and high interest rates. The decline in factory profits was due to the economic situation and the stagnation in Construction, not necessarily the Chinese price.
Creation of a Significant Shortage in the Construction and Housing Market
The Minister of Finance reveals a dramatic figure in his letter: blocking imports from China is not just an economic issue, but will lead to a physical shortage of raw material, as the local industry specializes mainly in private and luxury Construction, and is not equipped to supply standard profiles for high-density construction (towers) in the required volumes.
The Dry Numbers for 2025:
– Expected demand in the economy: approximately 99,000 tons of aluminum.
– Maximum local production capacity: approximately 51,000 tons only.
– Imports from other countries (excluding China): approximately 25,000 tons.
– The result: a shortage (“gap”) of approximately 23,000 tons per year.
The implication: accepting the Ministry of Economy’s position would lead to the halting of construction sites, delays in handing over keys to buyers, and the development of a “black market.”
A move that will contribute to the exacerbation of the Cost of Living and housing (approximately NIS 600 million per year)
According to Treasury calculations, imposing the levy means a direct damage of approximately NIS 600 million per year to the economy.
Aluminum constitutes approximately 5.8% of the residential construction input index. Any price increase in it is passed directly to the pockets of apartment buyers.
The Israeli aluminum market is concentrated (oligopoly). Imports are the only restraining factor on prices. Furthermore, changing tariffs now creates dangerous regulatory uncertainty ahead of the “What’s Good for Europe” reform in 2027. The market is in the midst of a transition to international standards, and imposing new trade restrictions now disrupts the preparations of importers and contradicts the government’s policy of removing barriers and opening the market.
Professional and Legal Backing
The Minister’s decision adopts the position of senior professional ranks and is legally anchored:
Legal Authority: The decision is based on court rulings (“the cannabis case”) and legal counsel opinions, which allow the Minister of Finance to consider broad considerations (housing, cost of living) and not be a “rubber stamp” for the Supervisor.
Competition Authority: Determined that there is a serious concern of harm to competition and that local manufacturers are unable to meet demand.
Chief Economist: Pointed out that the data on which the Supervisor based his decision were partial and that the “damage” to the industry stemmed from the war and a shortage of workers.
The Figure That Changes the Picture: China Canceled Subsidies
During the investigation, it became clear that the Chinese government recently canceled a 13% subsidy on aluminum exports. The implication: the price from China is already increasing. Imposing an additional levy would constitute a “double punishment” and be unnecessary for the Israeli consumer.
From the words of the Minister of Finance, Bezalel Smotrich: “My role is to look at the entire economy. I will not allow a move that will enrich a small number of factories at the expense of every citizen in Israel, exacerbate the housing crisis, and fuel the cost of living.”
