The trade between Türkiye and Israel endured numerous diplomatic challenges over the years but may not survive the latest rift over the war in Gaza.

Türkiye has suspended all bilateral trade with Israel until the conflict is resolved and aid can freely enter the Palestinian enclave.

The decision, announced earlier this month, cited the "worsening humanitarian tragedy" in the Palestinian territories and made Türkiye the first of Israel's key trade partners to halt exports and imports over its relentless attacks in Gaza.

Israeli importers are scrambling to find alternative sources of key items ranging from cement to food and cars in response to Türkiye's decision, which economists say may lead to near-term shortages.

But they suggest that it would not cause major harm to Israel's $500 billion economy.

"Türkiye is a significant trade partner of Israel, but we do not rely exclusively, or even remotely exclusively, on Türkiye," claimed Shmuel Abramzon, chief economist at Israel's Finance Ministry, who now believes Israel's 2024 economic growth will exceed his current 1.6% forecast.

"While some alternatives may introduce higher costs, we do not anticipate significant or persistent disruption to the Israeli economy by Türkiye's actions."

Bilateral trade slid nearly 23% to $6.2 billion in 2023, data shows, with Israeli imports accounting for around three-quarters of that figure.

After Ankara's move, several Turkish export companies told Reuters they were seeking ways of sending goods to Israel via third countries. But exporters and importers in both Türkiye and Israel have since said there is no sign of this succeeding.

Trade officials say Greece, Italy, and others are willing to fill the vacuum left by Türkiye and that deals are close, but the main problem will be finding alternative destinations for more than $1.5 billion worth of displaced Israeli exports, largely fuel, chemicals, and semiconductors.

President Recep Tayyip Erdoğan has branded Israel a "terrorist state," repeatedly called for an immediate cease-fire, and accused it of carrying out war crimes and genocide in Gaza.

Israel's attacks have killed nearly 36,000 people, mostly women and children, in the Palestinian enclave, according to local health officials.

The war started after the Palestinian resistance group Hamas' attack on Israel that resulted in the deaths of 1,170 people, according to Tel Aviv.

The Gaza Strip is suffering a humanitarian crisis, with the United Nations and aid agencies warning of impending famine.

Malnutrition in the enclave is widespread, with international aid efforts blocked by Israel's shutdowns of its Kerem Shalom crossing and the Rafah border crossing with Egypt.

Shortly before the war erupted, Erdoğan and Israeli Prime Minister Benjamin Netanyahu had met in person amid a slow improvement in ties long strained by the Palestinian issue. But their plans to visit each other's country were then shelved.

The Turkish president recently compared Netanyahu to historical fascist leaders, stating that "Netanyahu earned his place alongside Hitler, Mussolini, and Stalin."

Türkiye recalled its ambassador to Israel in November for consultations and flights between the two countries were suspended.

In response to the trade ban, Israeli Finance Minister Bezalel Smotrich said he would scrap the free trade agreement with Türkiye. The plan, he said, would be submitted to the cabinet for approval.

Türkiye is the first – and so far the only – major trade partner of Israel to suspend trade over the Gaza war. Türkiye ranked as Israel's fifth biggest trade partner and accounted for about 5% of its total imports.

However, it has accounted for some 40% of Israel's imported cement, said Shay Pauzner, deputy director general of the Israel Builders Association.

While the industry has turned to European suppliers, he said, "it will be much more expensive than from Türkiye," which is known for cheap industrial products.

"It's a problem, not a catastrophe," he suggested.

Meanwhile, two of Israel's main auto importers said certain models of Toyota and Hyundai cars were stuck at Turkish ports due to the trade ban.

Union Motors, Israel's Toyota importer, said the ban had impacted the delivery of Corolla and C-HR models and that it was seeking solutions.

Colmobil, which imports Hyundai autos from Türkiye, said it was suspending orders for some models and working with the manufacturer on supply solutions.

Similarly, Diplomat – one of the largest importers in Israel – said it was trying to find alternatives to Türkiye to bring in a range of consumer products, including brands from Heinz, Gillette, Braun and Pampers.

Israeli officials say they plan to increase local production to avert shortages.