What's up with Israel I've been focused on everything else but that.
What, are we deliberately alienating them now too? Specifically in a targeted fashion, I mean.
I'm not sure about how the US plays into it, but the Knesset dissolved for snap elections in September rather than accept the possibility of a government led by Gantz (Blue and White party - a new merger of three liberal, secular, and centrist parties) after Prime Minister Netanyahu failed to form a governing coalition back in April. Some allegations of misconduct like vandalized ballots, falsified ballots, and as I recall, Netanyahu conducting two radio interviews in violation of Israeli electoral laws barring political propaganda the night before and day of the election later, Blue and White narrowly came out ahead by a single seat due in significant part to support from Israeli Arabs.
Netanyahu was then given first shot at forming a coalition government again by President Rivlin: a plurality of the Knesset as a whole recommended Netanyahu first, it seems. Rivlin's also come out in support of a Blue and White/Likud coalition, which neither Netanyahu nor Gantz are likely to accept. Both parties are basically hobbled by lack of popular support right now. Netanyahu can pick up most of the seats he needs for a majority from the Haredi (ultra-Orthodox far-right), but that religious crutch is what alienated Lieberman (hardcore secularist/ultranationalist) and makes it difficult to form a majority government. Gantz is looking at more potential policy conflicts if he picks up the leftist parties who Netanyahu cannot hope for, but he's still coming from behind. The Joint List (Arabs) has weighed in against Netanyahu, but not necessarily in support of Gantz (who has come out in support of existing Israeli West Bank settlements, keeping the Golan, and unilaterally implementing a permanent two-state solution in order to prevent Palestine from "endanger[ing] our identity as a Jewish state"). Even combining Blue and White, Labour-Gesher, the Democratic Camp, and the Joint List would still fall short of a majority, though: here as well, Lieberman and his Yisrael Beitenu hold the final kingmaker position, but he also considers allowing the Joint List into government tantamount to treason (because Arab menace).
So, basically, things are interesting, and Israel may end up with a third set of Knesset elections. For America's involvement, as I mentioned, it's been negligible to the best of my knowledge. Trump loves Netanyahu (which tells you quite a bit about Netanyahu), but it doesn't follow at all that Gantz is anti-American. The only thing I can think of is that this pull-out may shake Israeli confidence in US support, but even there, I'm not sure Israel was any more or less confident in US support before Trump's declaration.
EDIT: Sorry, a plurality rather than a majority. After all, if it was a majority, we'd already be talking about Prime Minister Netanyahu again.