What Trump presidency means for Israel’s tech sector

 It’s just been more than two hundred days since Donald Trump was sworn in as United States president and to call his term “colorful” may be an understatement. He has been involved in more than a handful of controversies including his contested immigration policy, the possible collusion with Russia, delays in his healthcare plan, and his handling of the Charlottesville incident.

Both the traditional and social media spotlights have been trained on him ever since he entered the presidential race. His Twitter feed is always under watch that even his “covfefe” gaffe became viral instantly. News feeds from various organizations around the globe are also always saturated with the latest Trump news.

News about Trump’s handling of affairs shouldn’t escape concerned Israelis. The US continues to be an ally in both military and economic fronts and much still rides on this alliance. Israelcontinues to receive military aid from the US. Economically, bilateral trade between the two countries alone is worth $38 billion.

However, the relations with the US had been strained from the friction between Prime Minister Benjamin Netanyahu’s administration and Barack Obama’s. Trump’s presidency is expected to change that. Trump has been vocal in his support of Israel during his campaign and many from the Israel right considered it a welcome change of pace.

The tech sector, in particular, relies heavily on good relations with the US. With just a population of 8.5 million, Israel’s ventures also depend on a global market to do business. 14 percent of Israel’s economic output is from tech.

Over 300 international tech firms have put up their presence in the country including American tech giants Microsoft, IBM, and Intel. Google and Apple were also instrumental in several exits of Israeli startups such as Waze and PrimeSense.

Changes to existing policies in the US could affect how Israeli tech firms conduct business in major ways.

Trump’s planned tax policy may encourage more Israeli tech companies to relocate to the US. The US president promised to cut corporate tax rates to just 15 percent from the current 35 percent in order to encourage US-founded firms that brought businesses abroad to shift back to the country.

This would make the US a prime destination of Israeli companies. Israel’s corporate tax rate is 24 percent for the top earners so a tax rate of just 15 percent could save companies millions a year.

In addition, relocating would place them closer to the large US market for tech products and services. Tech companies usually support an operations base in the US while keeping their research and development locally. On the downside, this move may trigger a brain drain where top tech talent will move to the US – something that the government is monitoring.

Speaking of moving to the US, Trump is also keen on putting tougher immigration policies in place on an effort to keep his promise of bringing back jobs to the US.

His controversial order banning travelers from predominantly Muslim countries last January was met with strong opposition including being denied by appellate courts. His policies were also criticized by American Jewish groups saying that what could happen to Muslims may also happen to Jews.

Trump believes that the current regulations have been exploited to the detriment of American workers. To be fair, the H-1B visa is known to have loopholes of which outsourcing firms particularly those from India take advantage.

Israeli firms, however, may need not be alarmed by new policies concerning these visas. While there are Israelis who are staying in the US under such arrangements, most entrepreneurs and those who work for Israeli tech companies have options obtaining E-2, O-2 and L-1A and L-1B visas to legally work in the US.

In other tech areas, Trump also signed an order to improve the US’ cybersecurity measures last May. Such a move draws attention and creates more awareness regarding the rising cybersecurity threats worldwide.

Cybersecurity happens that one of Israel’s leading tech verticals and the US and Israel are known to share their capabilities in this area. A growing vigilance may create additional business for Israel’s cybersecurity firms.

Some of these planned changes such as his planned tax cuts and immigration policy changes have yet to come to fruition. However, these are definitely areas that Israeli’s tech sector should be closely monitoring since any of these developments may create new opportunities that ventures could explore. Given Trump’s temperament and history, may come as sudden as one of his Tweets.