By the end of the year, the U.S. will stop providing Israel with billions of dollars in annual assistance, President Donald Trump proclaimed Tuesday morning. The announcement was delivered as both Washington and Jerusalem are mulling plans for a new wave of attacks on Iran and amid increasing American voter antipathy toward the Israel in the wake of the Gaza war and America’s involvement in the war with Iran.
While Israeli Prime Minister Benjamin “Bibi” Netanyahu has openly discussed weaning his country off direct U.S. assistance in favor of more cooperation on weapons development, the Trump announcement still caught many there by surprise. It also raises a lot of questions about Congressional authorization and the impact on future sales of advanced arms from U.S. manufacturers, many of which are planned, that still have to be answered.
“As far as paying Israel, Bibi Netanyahu and I have made a deal that – we give Israel $4 billion a year – and we made a deal months ago that we’re stopping,” Trump told Fox & Friends Tuesday morning during his message to American voters going to the polls for the midterm election. “And they’re fine with it because you know they have become a very successful country. They don’t need it, and we won’t be paying anymore to Israel, so it’s just a wasted thing because we’ve already agreed that by the end of this year we won’t be paying Israel.”
“Now we’ll help Israel if they need it,” the American leader added. “You know they’ve been a great ally, and we’ve been the greatest of all allies to many many countries.”
Trump did not elaborate on what specific expenditures he was referring to, and we’ve reached out to the White House for more details. However, the president was almost certainly talking about the ongoing decade-long Memorandum of Understanding (MoU) with Israel.
The MoU calls for providing $3.8 billion in annual aid and it is drawing to a close. Set to run through 2028, the vast majority of that funding is for Foreign Military Financing (FMF) to purchase weaponry mostly from American manufacturers.
U.S. military aid to Israel by the year. (Congressional Research Service)
“In 2016, the U.S. and Israeli governments signed their third 10-year Memorandum of Understanding (MOU) on military aid, covering [Fiscal Year] 2019 to [Fiscal Year] 2028,” according to a 2025 Congressional Research Service (CRS) report. “Under the terms of the MOU, the United States pledged to provide—subject to congressional appropriation—$38 billion in military aid ($33 billion in Foreign Military Financing (FMF) grants plus $5 billion in missile defense appropriations) to Israel.”
The MoU is merely a promise and not legally binding. Congress has to approve any funding requests.
A New Deal
Washington and Jerusalem began negotiating a new MoU in June, according to the Israeli Defense Ministry (MoD).
“The new framework, reflecting the strategic vision of Israel’s Prime Minister and Minister of Defense, is designed to strengthen the IDF’s qualitative military edge through expanded joint investment in research, development, and co-production, deepen the U.S.-Israel partnership demonstrated during Operation Roaring Lion, and gradually transition from aid to a completely reciprocal partnership,” MoD explained.
Netanyahu has been warning Israel for months that it would have to face reduced assistance from the U.S.
“If you think we will continue receiving what I secured twice — tens of billions of dollars in American aid for the defense budget — you’d better prepare yourselves and get used to the idea that this will not continue,” he told Israeli media last month, according to Bloomberg News. “That is because America has changed, not because Israel has changed. It will end. It is only a matter of time.”
Netanyahu added that Israel has two more years with Trump, but must prepare for a less favorable Washington after he leaves power.
Israeli Prime Minister Benjamin Netanyahu has told Israel for months it will have to rely less on U.S. military aid. (Photo by Alexi J. Rosenfeld/Getty Images) Alexi Rosenfeld
In January, the Israeli leader said he wanted to reduce Israel’s reliance on American aid. He told The Economist that he was not seeking the full renewal of the MoU, which has to be renegotiated by 2028.
“I want to taper off the military aid within the next 10 years,” Netanyahu told the publication. Asked if he meant “to taper it off to zero,” Netanyahu said “yes.”
“We want to be as independent as possible,” the Israeli leader proffered. Referring to his meeting with the the American president in Florida in late December, Netanyahu added: “In my visit to President Trump, I said we very deeply appreciate the military aid that America has given us over the years, but here too we’ve come of age, and we’ve developed incredible capacities.”
For Israel, the MoU “now matters less for the money it provides than for what it signifies: a gauge of the depth and durability of U.S. support,” the Crisis Group think tank argued in August. “To be sure, FMF has enabled Israel to build up its military power without fully bearing the cost, and phasing out this assistance would impose real burdens. Israel would have to pay for critical U.S. weapons from its own budget.”
However, with its annual GDP now exceeding $700 billion and defense spending above $40 billion, “Israel has found increasing difficulty in arguing that it requires an additional $3.3 billion each year for military purchases,” Crisis Group posited. “Netanyahu has asked the finance ministry to allocate billions of dollars in additional funding for the defense budget over the next decade, a large portion of which would be earmarked to procure U.S. fighter jets, on the assumption that Israel will no longer receive the funds necessary for these purchases from Washington.”
Israeli Air Force F-15 Baz fighters. (Amit Agronov)
Since the attack by Hamas, U.S. money from the MoU has made up a smaller percentage of the Israeli MoD’s overall budget as the country has increased its own defense spending. Those funds have also been bolstered by several large tranches of U.S. supplemental aid to procure bombs and other weapons.
“For most of the last 15 years, the $3.3 billion Israel receives annually in FMF made up roughly 20% of Israel’s defense budget, which was itself 5-6% of Israel’s GDP in the same period,” the Israel Policy Forum (IPF) explained in May. “Both Israeli defense spending and the share coming from U.S. aid slowly declined amid major economic growth throughout the 2010s, and then spiked in 2023 following the October 7 Hamas attack on Israel and ensuing wars.”
IPF stated that after the Hamas incursion, “Israel sharply increased defense spending (both within the regular budget framework and in extraordinary expenditures) to 8-9% of GDP, and the U.S. gave Israel several large supplemental security assistance packages between late 2023 and early 2026 in addition to the MOU-directed security aid.”
“The net result, taking into account both much higher Israeli spending and large amounts of American aid, is that in 2024 U.S. assistance briefly accounted for more than one third of Israel’s defense budget,” IPF noted. “In 2025 this figure dropped to close to 10%, with Israel spending an estimated NIS 168 billion ($52 billion) on defense in that year.”
Until recently, “Israel had been given a partial exemption” on the requirement that FMF funds be allocated for American products,” the Crisis Group noted. This allowed Israel to “invest a portion of the money in its own defense industry, Crisis Group explained. “This carveout, in turn, has made Israeli firms more competitive in the arms export market.”
Heavy Reliance On American Hardware
Israel, which has received more than $175 billion in U.S. aid since its creation in 1948, relies heavily on American weaponry. The Israeli Air Force (IAF) tactical aviation fleet consists of U.S.-built F-15s, F-16s, F-35s and AH-64 Apache attack helicopters, among other U.S. types. Israel also made deals for a number of other platforms including KC-46A aerial refueling tankers and CH-53K heavy-lift helicopters and it uses large amounts of American precision munitions. Meanwhile, Israeli missile defense systems like Iron Dome and Arrow 3 have been developed with significant assistance from the U.S.
Israeli F-35I Adir fighters. (Israel Defense Forces)
A top Israeli MoD official told The Times of Israel (ToI) last month that his country wants to flip the switch to add value to the American defense industry by using its experience developing weapons as it fights seemingly constant wars. The continual threats from regional actors and terror groups allow Israel to serve as a testing ground for U.S. defense technologies, Aviram Hasson, director of the Defense Ministry’s mission to the US and Canada, explained.
“Hasson pointed to engineering breakthroughs and intellectual property emerging through development of Israel’s active-defense systems, saying every US government request for technology arising from the long-range anti-ballistic missile Arrow 3 program has been fulfilled,” the publication noted.
“It is clear on both sides of the ocean that this cooperation is a strategic need of both powers, not only of Israel,” Hasson told ToI.
U.S. Has Paid Far More Than $4B A Year For Israel’s Defense
Beyond direct financial aid, the U.S. has expended a great deal of resources defending Israel over the past several years. This has included defending against multiple Iranian missile barrages on Israel on top of participating directly in two wars. In addition, there were the constant drone and missile battles in the Red Sea with the Houthis, who began attacking shipping there in response to Israel’s war in Gaza. Part of the U.S. operation against the Houthis was also providing a layer of protection against long-range missile and drone launches at Israel by the rebel group.
During the course of all these events, the U.S. deployed a very large number of its available warships, aircraft, and air defenses, as well as thousands of personnel, to the Middle East at great expense, both in dollars and the toll on troops and equipment.
ISMAILIA, EGYPT – MARCH 14: An U.S. aircraft carrier transits the Suez Canal in the city of Ismailia, Egypt, which connects the Mediterranean and Red Seas, on March 14, 2026. (Photo by Stringer/Anadolu via Getty Images) Anadolu
Just this year alone, 23 U.S. troops have died and nearly 900 have been injured since the launch of Epic Fury in February. Dozens of aircraft have been destroyed and U.S. bases in the region have been partially destroyed and will take billions to repair.
The U.S. has also fired off a large amount of its own munitions defending Israel from attacks by Iran and its proxies. This has contributed heavily to shortfalls in America’s own stockpiles.
All told, the U.S. has spent nearly $50 billion just on the most current conflict with Iran, far exceeding the $4 billion Israel gets per year in annual direct aid. Then there is the opportunity cost of the massive wear and tear on the force and the U.S. military’s overall capacity to fight in the near and medium term due to all these engagements.
All that being said, it can be argued that the U.S. had major interests in participating in these conflicts beyond just the defense of Israel. It is rarely just that simple. The Iran nuclear program, for instance, has impacts much farther than the Middle East and Israel. Still, the U.S. has poured unprecedented resources into Israel’s defense and these investments far eclipse the $4B being discussed today.
Surprise In Israel
Many Israeli government officials were caught completely off guard by the Trump announcement, according to Politico.
“Officials in the Finance Ministry say they were surprised by U.S. President Donald Trump’s announcement that military aid to Israel would cease by the end of the year, ” the publication reported.
“No formal document was submitted from the Prime Minister’s Office regarding the end of aid,” Politico added. “The ministry was aware of the intention to end it, but was surprised by the intention to do so immediately.”
Officials in the Defense Ministry and the military were also reportedly surprised by the announcement, according to the Post.
“We did not expect this announcement, certainly not today,” a senior defense official told Israeli media.
“There is ongoing dialogue with the Americans, and we can say that we were surprised. We will study the implications of the decision, which has yet to reach professional officials,” the official is quoted as saying.
As for Netanyahu, he has yet to weigh in on Trump’s statement. However, one of his main rivals in the closely fought Israeli parliamentary election that could unseat him has commented.
“The fact that Israel’s defense establishment is learning of a shift in our strategic relationship through the media, at the same time as the Israeli public, shows just how dangerous Benjamin Netanyahu’s conduct is,” Gadi Eisenkot said in a statement. “He can no longer be trusted and must be replaced.”
In his comments to Fox & Friends, Trump conceded that the midterm election played a role in his decision.
The annual assistance to Israel is a “bad talking point” for Democrats, including Michigan Democratic Senate nominee Abdul El-Sayed, the president proclaimed.
“The left uses the $4 billion payment … as a signal of unfairness. And we can’t allow that to happen,” Trump stated. “I don’t like that. … It’s almost too easy to target
There are many unknowns surrounding Trump’s statement about diminishing U.S. support for Israel.
The MoU, if that is what he is talking about, still has two years left, and almost $8 billion worth of anticipated funding, the vast majority earmarked for procurement of U.S. arms.
As we noted at the top of this piece, the MoU itself isn’t legally binding but the aid is authorized by law and appropriated by Congress each year. Ending it early would mean Congress either not appropriating the money or changing the law.
Will Congress agree to cut the deal off by December? What about the U.S. defense industry? It is unclear at the moment how, or if, this move would affect American defense contractors selling arms to Israel. These companies depend in large measure on predictability and taking this agreement off the table two years early could be problematic.
It is not exactly clear at this point which U.S. arms makers will be hit the hardest by Trump’s announcement. There are billions of dollars in contracts for the future procurement of aircraft, munitions and other equipment to companies like Boeing for F-15Is and KC-46As, Lockheed Martin for F-35Is and AM General for Joint Light Tactical Vehicles. While Israel has bumped up its defense budget, it is not really known at this point how it will cover these costs without that lost U.S. aid.
Contact the author: howard@twz.com