March the 14th, 2025 – The Trump tariffs are dominating the headlines, and with his recent negative statements about the EU in mind, how will they affect the Croatian economy?
As Jadranka Dozan/Poslovni Dnevnik writes, there’s plenty of daily speculation on what a trade war between the US and the EU might actually end up looking like in the end. There are theories about what the consequences of imposing tariffs could be for future trade and the EU’s economy, both directly and (more) indirectly. There’s also plenty of local talk about what the Trump tariffs will mean for the Croatian economy.
It seems that the very fact of waving them doesn’t come without an impact on the dynamics of foreign trade, with both exports and imports increasing at the end of last year and at the beginning of this year.
the croatian economy in exports and imports
Back in December 2024, the value of exports of goods accelerated to almost 12.7 percent on an annual basis, with imports growing by almost six percent. According to preliminary data from Croatia’s state statisticians for January, in the first month of this year, exports were nine percent higher and imports were 9.6 percent higher than in the same month last year.
Economists are currently wondering whether the growth in imports can be partly attributed to continued strong domestic demand. The reality is that this was also partly due to the business sector’s efforts to create certain stocks of goods before the impending introduction of US tariffs. It remains to be noted that on the import side in January, imports to Croatia from other EU countries increased by only a slight 0.4 percent in annual comparisons, while imports from non-EU countries were as much as 51 percent higher than in the same month last year.
The annual growth rates of total exports and imports back in December and January are certainly significantly higher than those achieved for the entire last year, in which the value of exports increased by 4.8 percent and imports by 5.8 percent.
This has corrected upwards the preliminary estimate published somewhat earlier, of 4.6 percent growth on the export side and 5.4 percent for imports. It should also be noted that the achieved rates are the result of significantly more dynamic export-import trends in the second half of the year compared to the first half of the year.
Looking at the situation in absolute values, total exports reached 24 billion euros, while goods worth 41.9 billion euros were imported. According to the provisional results, the foreign trade deficit thus reached slightly less than 18 billion euros, or about one billion more than the year before. The coverage of imports by exports amounted to 57.3 percent – which is the lowest level since back in the economically problematic year of 2009.
Stagnation towards the EU
Last year, exports to EU markets were more or less stagnant. They increased by only 0.7 percent, while on other markets, they increased by over 13 percent. A significant portion of that total increase in the value of exports is due to the growth of goods exported to neighbouring Bosnia and Herzegovina, which increased by 17 percent compared to the previous year.
In the end, a higher value of exports was realised only with Germany and Italy, with the fact that Croatian exports to Germany increased by less than two percent, while to Italy, it was about two percent lower than the year before. If you look at the EU internal market, exports have decreased across ten member states, including nearby Austria and neighbouring Hungary. At the same time, the growth of exports was dominated by Slovakia, to which more than twice the value of Croatian goods was exported.
The largest absolute growth in exports was recorded in mining and quarrying, oil product production and the pharmaceutical industry. Given the latter’s share in Croatian exports to the US, could be among the sectors that would be (directly) most affected by the introduction of Trump’s tariffs.
Incidentally, Croatia’s direct exports across the pond to the US represent only a few percent of its total exports. It is estimated however that through the demand of the main foreign trade sectors, direct imports could be higher.
a continuation of strong demand
Economic analysts expect that strong Croatian demand will likely continue to reflect on the dynamics of imports of goods. On the other hand, according to Raiffeisen Bank, volatility in the energy sector also has a significant impact on the growth in the value of exports of goods. Although the sector recorded a mild recovery in 2024, the total growth in the value of exports is still more modest than that of imports of goods.
In addition to all of that, with an already high base in imports, a relatively mild deepening of the trade deficit is also likely. It remains to be seen whether external demand will strengthen to any extent, which would certainly have a positive impact on exports of goods. Potential protectionist measures in international trade and still-present geopolitical tensions seem to be the main factors that could significantly affect trends in trade, RBA concluded.
the trump tariffs and the croatian economy begs the question for some companies: who needs america?
Nevertheless, in the prevailing gloomy outlook regarding an EU-US trade war, several Croatian export flagships are also reporting significant new contracts these days. AD Plastik Grupa announced this week that they have signed a deal with a new customer for the EU market, with expected revenues of 126.8 million euros over the planned decade long project period.
They revealed that this is a new manufacturer on the EU’s automotive market that will produce luxury electric cars on the most technologically advanced battery platform. Similarly, the famed Končar also boasted of a new contract this week, for the construction of a transformer station up in Sweden, and the value of this contract is around 18.4 million euros.
