In a move that has sent shockwaves through global markets, U.S. President Donald Trump announced on April 2, 2025, the implementation of sweeping tariffs aimed at reducing trade deficits and bolstering domestic manufacturing. These tariffs include a universal 10% baseline on all imports, with elevated rates for specific countries and sectors. Notably, the European Union faces a 20% tariff on its exports to the U.S., and the automotive industry is particularly targeted with a 25% duty on cars and car parts.
The economies of Central Europe and the Balkans, heavily reliant on exports, are poised to experience significant repercussions from these measures. The Confederation of Danish Industry projected that U.S. tariffs could reduce GDP in the Czech Republic, Hungary, Poland, and Slovakia by 2-4%.
Poland: While Poland’s direct exposure to U.S. trade is relatively modest, with exports to the U.S. accounting for approximately 1.5% of its GDP, the indirect effects through the European supply chain are concerning. The Polish Economic Institute estimated that a 25% U.S. tariff on the EU could lead to a GDP contraction of 0.38-0.45%.
Czech Republic: The Czech economy, with its substantial automotive sector employing around 500,000 people, is vulnerable due to its integration into the European car manufacturing supply chain. The Czech Automotive Industry Association warned that the tariffs would significantly impact Czech suppliers, leading to reduced export opportunities and potential loss of orders.
Hungary and Slovakia: Both countries, deeply embedded in automotive production, face similar challenges. Analysts predict that Slovakia could see a GDP reduction of up to 1.5 percentage points over three years due to the tariffs.
Serbia: Among Balkan nations, Serbia is notably affected, facing a 37% tariff on its exports to the U.S. In 2024, Serbia exported goods worth $670.1 million to the U.S., including tires, arms, machine parts, and copper. The steep tariff is expected to dampen these exports significantly.
Bosnia and Herzegovina: With a 35% tariff imposed, Bosnia’s defense industry, a key sector for exports to the U.S., is likely to experience adverse effects. The U.S. accounts for about 1% of Bosnia’s total foreign trade.
North Macedonia: Facing a 33% tariff, North Macedonia’s exports of tobacco, clothing, iron, and steel to the U.S. are at risk. In 2024, the U.S. was the country’s 18th most important trade partner, with total trade amounting to $314 million.
Albania and Kosovo: Both countries are subject to a 10% tariff. Albania’s exports to the U.S. are minimal, so the immediate economic impact may be limited. However, Albanian officials are advocating for strategic engagement with the U.S. to mitigate potential long-term effects. In Kosovo, the American Chamber of Commerce has urged the government to unilaterally remove customs duties on U.S. goods, hoping for reciprocal actions to sustain export growth.
The broader European Union is also bracing for economic downturns, with forecasts indicating a potential reduction in GDP growth by 0.3 percentage points over the next two years due to the 20% tariffs.
In response to these tariffs, European leaders have expressed readiness to implement countermeasures if negotiations with Washington do not yield favorable outcomes. The situation remains fluid, and the full economic ramifications will depend on the duration of the tariffs and the responses from the affected nations.
