Trump says US will end $4 billion annual aid to Israel in 2027, replace it with arms sales

President Donald Trump declared on Tuesday that the United States will cease providing $4 billion in annual aid to Israel starting in 2027. In its place, Washington will sell weapons directly to its closest ally in the Middle East. Trump made the announcement during a phone call with Fox News on the day of the US midterm elections. He stated that Israeli Prime Minister Benjamin Netanyahu approached him with the idea and that the two leaders have discussed the matter for the past two years.

The shift marks a departure from decades of policy where the US provided direct financial assistance. Trump argued that Israel no longer requires the funds and that the cost represents a heavy burden for the American taxpayer. He also noted that the aid has become a political target for Democratic candidates. Abdul El-Sayed, a candidate for the Senate in Michigan, has openly criticized the relationship with Israel. Trump described the new arrangement as a trade, saying the US gives Israel things and money they do not need.

The timeline of this policy change stretches back further than the current administration. In 2016, President Barack Obama signed a ten-year security agreement worth $38 billion, or $3.8 billion per year. Under that deal, Israel’s ability to spend funds on Israeli products was gradually reduced, directing more money to US defense industries. Netanyahu has long discussed reducing this dependence. In a January interview with The Economist, he said he wanted to gradually reduce US military aid over the next decade and stated that the process was already underway.

However, experts question whether the timeline is realistic. The current memorandum of understanding does not expire until 2028. A complete halt by 2027 would require Congressional approval. Analysts suggest a gradual phase-out is more likely if Congress agrees. The 2027 National Defense Authorization Act includes a provision to expand cooperation in defense technology development and integrate Israeli technology into the US military. This bill has not yet been passed by Congress.

Israel’s political opposition reacted swiftly to the announcement. Gadi Eisenkot, a former military chief and Netanyahu’s main rival, criticized the Prime Minister for letting the public learn of the strategic change through the media rather than an official statement. Yair Golan, another opposition leader and former deputy military chief, warned that ending the aid would deliver a severe blow to Israel’s security. He noted that the country is fighting wars on multiple fronts and that the cost of financing defense needs would fall entirely on the Israeli public. Netanyahu’s office offered no comment on the announcement during Tuesday evening in Israel.

Behind the scenes, diplomats have debated restructuring the relationship into a defense technology partnership. One person familiar with the discussions, who spoke on condition of anonymity, expressed concern that Israel might surrender intellectual property while still facing US restrictions. US Representative Ro Khanna, a Democrat from California, criticized the integration provision in the defense bill, arguing it would strip the US of sovereignty.

The change complicates existing obligations. The Camp David peace agreements require the US to support both Israel and Egypt with security assistance. Additionally, most US aid is foreign military financing, which mandates that the funds be spent on American-made weapons. This reinvests the money in the US economy. If Israel stops using the aid, US defense contractors may face financial impacts. Even if aid stops immediately, many previous purchases remain in the production pipeline. These items take years to build and deliver. David Schenker, a former Trump envoy for the Middle East, asked whether arms deliveries will be affected and if Israel will be prioritized.

Trump maintained that the change is mutually beneficial. He said Netanyahu was very understanding of the need to stop the aid from being a political talking point. The president emphasized that the two leaders have been in agreement for years. The decision leaves the formal structure of the alliance to be renegotiated between the two governments and the US Congress.