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By Steve Holland
WASHINGTON (Reuters) -Israeli Prime Minister Benjamin Netanyahu promised on Monday to eliminate Israel's trade surplus with the United States, a move likely to be closely watched by world leaders as President Donald Trump's tariff policy roils global markets.
"We intend to do it very quickly," Netanyahu said as he sat beside Trump in the White House Oval Office. "We think it's the right thing to do, and we're going to also eliminate trade barriers."
Netanyahu was the first foreign leader to meet with Trump at the White House since the U.S. president announced a sweeping tariff policy last week that has hammered global financial markets and raised concerns of a recession.
The United States, Israel's closest ally and largest single trading partner, last year had a $7.4 billion goods trade deficit with Israel.
Under Trump's new policy, Israeli goods face a 17% U.S. tariff.
When asked if his administration planned to reduce tariffs on Israeli goods, Trump made no promises.
"We've been ripped off and taken advantage of by many countries over the years, and can't do it anymore," he said.
Israel had already moved to cancel its remaining tariffs on U.S. imports last Tuesday. The two countries signed a free trade agreement 40 years ago and about 98% of goods from the United States are now tax-free.
The visit by Netanyahu on Monday was his second to the White House since Trump began his second term on January 20.
During their Oval Office talks, the two leaders also discussed the 18-month-old war in Gaza and the fate of hostages taken from Israel and still held in the Palestinian enclave.
Netanyahu said he was working on a new Gaza hostages-for-ceasefire deal with Hamas.
"We're committed to getting all the hostages out," he said.
Trump announced plans for direct U.S. talks with Iran at an undisclosed location on Saturday. He said Iran would face "great danger" if it refuses to make a deal over its nuclear program.
The two leaders had planned a joint press conference in the East Room. But the public appearance was switched to the Oval Office, making it a less formal event with a smaller group of reporters invited in to ask questions.
The outcome of Trump's tariff talks with Netanyahu could signal to other foreign leaders whether Trump is willing to bend on the levies and how best to approach him.
Trump extended the surprise invitation in a phone call on Thursday with Netanyahu when the Israeli leader raised the tariff issue, according to Israeli officials.
An Israeli finance ministry official said on Thursday that Trump's tariff announcement could affect Israel's exports of machinery and medical equipment.
(Reporting By Steve Holland; Additional reporting by Steven Scheer and Emily Rose; Editing by Colleen Jenkins and Howard Goller)
