Massive Trade Blow? How New US Tariffs Could Quietly Cost Bulgaria Millions

The imposition of new import tariffs on European goods entering the United States is expected to have a significant impact on the Bulgarian economy, with projected losses exceeding 1.2 billion leva (approximately 626 million euros). This estimate comes from calculations by the Ministry of Economy in collaboration with the Institute of Economics at the Bulgarian Academy of Sciences, as reported by BNT.

The Ministry forecasts that Bulgarian exports could fall by around 1.5% as a direct result of the trade agreement. However, officials emphasize that negotiations over the scope and application of the tariffs are still ongoing. Key details - such as which goods will face higher duties, which will be exempt, and which will benefit from zero-tariff treatment - remain to be clarified. Businesses in Bulgaria are urging the government to adopt a more assertive stance within the EU, particularly in defending domestic interests related to steel and aluminum.

Currently, exports to the United States represent only 3.3% of Bulgaria’s total export volume. Yet the impact of the new measures is expected to be concentrated in strategically important sectors. “We anticipate a reduction in trade turnover by about 626 million euros. Unfortunately, this will affect sectors that matter to our economy. At this stage, steel and aluminum appear to be among the most vulnerable, especially given the 50% tariff rate already applied,” explained Deputy Economy Minister Doncho Barbalov.

To mitigate the impact, the Bulgarian government hopes to secure export quotas for key products, which would allow Bulgarian companies to avoid the steepest tariffs. Industry representatives also see quotas as a potential buffer. “This is still only a framework agreement. The specific quotas are not yet defined, which makes them crucial in determining the outcome. Additionally, there’s uncertainty about potential changes to non-tariff measures,” noted Shteryo Nozharov, economic advisor to the Bulgarian Chamber of Commerce.

The private sector is calling for stronger government involvement in the next phase of negotiations. Businesses are also urging the state to conduct a thorough analysis of the structure of Bulgarian exports to determine which goods are final products, which are intermediate goods, and how they are categorized under the new agreement.

Even though the automotive sector has been partially shielded from immediate tariff hikes, Bulgaria remains indirectly exposed due to its deep integration into European supply chains. “There are numerous companies in Bulgaria that supply components to European car manufacturers. That’s why we’re following developments very closely,” Barbalov said.

Germany, Bulgaria’s largest EU trading partner, has already signaled that it expects the new tariffs to deliver a sharp shock. In response, the European Union is preparing a two-pronged strategy: introducing defensive tariffs on certain Chinese imports and expanding access to alternative markets outside the US.

“For us, the key will be to refocus efforts within the EU toward finding new destinations for our goods. There are several major trade deals that are nearing completion or in progress,” said Barbalov, pointing to ongoing negotiations with countries in South America, India, and Australia.

At the same time, some economists warn against adopting reactive compensation measures. According to Cinzia Alcidi of the European Centre for Political Science, responding to tariff-related losses with state subsidies would be a mistake. “We can expect rising pressure from businesses across EU countries demanding compensation. But introducing subsidies in response would be a fundamental error,” Alcidi argued.

On a more optimistic note, officials at the Ministry of Economy and Industry believe that Bulgaria’s accession to the eurozone will improve the country’s economic resilience and help offset some of the negative effects triggered by the US tariffs.