US Aid Cut to Israel Agreed by Netanyahu, Trump Says

U.S. President Donald Trump announced that American security assistance to Israel, amounting to approximately $4 billion annually, will cease by the end of 2026. Trump stated in an interview with Fox News that this agreement was reached with Prime Minister Benjamin Netanyahu several months ago, and that Netanyahu initiated it. "They don't need it," Trump said, adding that the U.S. would still assist Israel if necessary. The announcement comes ahead of U.S. midterm elections amid declining support for aid to Israel in both parties. In July, 104 House members voted to immediately cancel $3.3 billion in aid, a proposal that failed but saw significantly more support than a similar measure two years prior.

The timing is seen as strategic, potentially preempting a unilateral cut by a Democratic-controlled Congress if Trump faces electoral setbacks. The current Memorandum of Understanding, signed in 2016, guarantees Israel $38 billion over a decade, with $3.3 billion for military procurement and $500 million for missile defense, set to expire in 2028. Trump's announcement has created ambiguity regarding whether this signifies an early termination of the MOU or a refusal to renew it. Netanyahu had previously spoken of a gradual reduction, aiming for zero aid within a decade, and more recently indicated that substantial U.S. aid would no longer be a given due to changes in America.

Some officials in Israel's Ministry of Finance do not view the aid cessation as a catastrophe. One senior official described it as "excellent" because the aid had negatively influenced the IDF's procurement decisions, leading to purchases that were not essential. He asserted that Israel's economy can absorb the financial impact and suggested that the defense establishment, which has relied on U.S. funds for years, should not lament the change. A former Finance Ministry official echoed this sentiment, calling it the "best thing that happened to us" and highlighting the newfound independence it would bring, reducing reliance on U.S. military hardware and potentially cutting down on the size of the Ministry of Defense's delegation in New York.

The U.S. aid agreement mandates that nearly all funds be spent on American-made weapons, limiting Israel's ability to purchase domestically. Beyond the annual $4 billion, the U.S. has provided substantial additional military aid, particularly since October 2023, totaling at least $21.7 billion between October 2023 and September 2025, according to the Watson Institute's Costs of War project. The U.S. has also incurred significant costs in its campaign against Iran. While the annual aid represents less than 1% of Israel's GDP and is considered absorbable, the timing is problematic. The cessation could impact a budget for an unapproved government following three years of war expenditures. Israel will continue to purchase arms from the U.S., but will now do so with its own funds, raising questions about whether the defense establishment will seek to cover the shortfall from the national budget, potentially at the expense of other sectors like health, education, and infrastructure.