Israel faces uncertainty over arms deals after Trump vows to end US aid

KAN estimates Israel’s defence budget would face a shortfall of $3.8 billion a year if US aid ends in January

Israeli defence and finance officials are assessing how the country would pay for weapons already on order and replenish military stocks depleted by three years of war after US President Donald Trump announced that Washington would end aid to Israel by year’s end, Israeli media reported on Tuesday.

Speaking to Fox News on Tuesday, Trump put annual US aid at $4 billion and said he had reached an agreement with Israeli Prime Minister Benjamin Netanyahu months earlier to stop it. “We won’t be paying any more to Israel,” he said. He added that Washington would still help Israel if needed and would continue selling it weapons.

A potential gap in the defence budget

Israel’s Finance Ministry first learned of the plan when Trump announced it, Channel 12 reported. The $3.8 billion in annual US military assistance had been expected to help finance Israel’s defence budgets in 2027 and 2028.

A senior defence official told Israeli public broadcaster KAN that the announcement had come as a surprise despite ongoing talks with US counterparts. The official said the relevant agencies had yet to receive the decision and would assess its implications.

Read: Trump says US will stop $4 billion in funding to Israel at end of 2026

Just two weeks earlier, on October 20, an Israeli Defence Ministry delegation had visited Alabama to discuss future purchases with US Army Security Assistance Command officials, KAN reported.

KAN economic commentator Shaul Amsterdamski estimated that if the cutoff began in January, it would leave an immediate gap of 12 billion shekels ($3.8 billion) a year in the defence budget. He said the ministry had already made spending commitments and that the government could cover the shortfall through higher taxes, spending cuts or faster growth that brought in more tax revenue. He considered higher taxes the likeliest outcome.

Who pays for jets already on order?

Officials familiar with Israel’s security talks with Washington told Channel 12 they wanted to know where the money would come from for fighter jets covered by contracts already signed and what currency Israel would use to pay for them.

Officials were also trying to establish whether Trump’s announcement meant funding would stop at the end of the year or whether the two countries would shift gradually to a different model of defence cooperation, the channel reported.

Under a 10-year memorandum signed in 2016, Washington committed $38 billion in military assistance to Israel through 2028. The two countries began formal talks in May on a successor arrangement. The implications of Trump’s announcement for existing commitments and those talks remain unclear.

Years of fighting have depleted military stocks

The Israeli daily Maariv reported that the air force logged as many flight hours over the past three years as it would normally fly in nine years of peacetime, increasing wear on aircraft and adding to maintenance demands.

The newspaper said tanks and armoured personnel carriers went through thousands of engines over the same period. It also reported that the military used as much ammunition in those three years as it had in the three decades before the war.

Maariv said an end to US funding would make it harder for the military to replace that ammunition and equipment, adding to the cost of financing purchases Israel has already agreed to make.