site.btaBulgaria Faces USD 678 Mln Negative Impact If U.S. Imposes 25% Tariffs on EU Goods, Says Deputy Economy Minister Barbalov

The potential negative impact on Bulgaria from a possible U.S. introduction of 25% tariffs on EU goods would amount to USD 678 million. This would mean a 0.49% annual decrease in the country’s total exports compared to the levels without tariff restrictions, Deputy Economy and Industry Minister Doncho Barbalov told the Bulgarian News Agency. The government is prepared with support measures for Bulgarian exporters to offset a potential drop in exports, he added.

The export decline estimate takes into account both direct and indirect effects on Bulgarian exports. The direct impact refers to the direct export of Bulgarian goods to the U.S., while the indirect impact comes through third countries – for example, the United Kingdom and Turkiye – where tariffs are expected to be lower, which would lead to a smaller deviation in Bulgarian exports to the U.S., the Deputy Minister explained. He noted that the Economy and Industry Ministry has prepared scenarios for the potential effects of new U.S. import tariffs, with the analysis based on projected increases of 25%.

“We have developed a model that allows us to input different tariff values and assess the specific results and effects depending on the size of the tariff – whether it is agreed upon or unilaterally imposed on the EU,” Barbalov added.

No trade agreement has yet been concluded between the U.S. and the European Union. EU officials remain optimistic that a deal will be reached before the July 9 deadline to avoid tariff hikes. If this does not happen and the 90-day grace period for the so-called reciprocal tariffs by U.S. President Donald Trump expires, European goods imported into the U.S. may be subject to various tariff rates.

Earlier this week, the U.S. announced it would impose 10% tariffs on around 100 countries. Major trade partners still negotiating with Washington may face even higher tariffs — including 20% for the European Union, 26% for India, and 24% for Japan. Trump said that he had already signed letters to 12 countries outlining the proposed tariff levels, which would be sent out on Monday.

Next week will be critical in determining whether the higher tariffs will be implemented, Deputy Minister Barbalov commented. “Bulgaria is contributing to the EU’s collective negotiation process, and we can only hope that developments will be favourable,” he added.

The base model has been developed with the assumption of 25% tariffs, taking into account certain characteristics of Bulgarian exports to the U.S. On the one hand, only 35% of Bulgaria’s exports to the U.S. are for direct end consumption — which is a positive for the country, because the remaining portion is used as components in other goods and products. This means that they are already integrated into the U.S. production chain and would be harder to substitute if restrictive tariffs are introduced, Barbalov explained.

The analysis includes not only direct trade with the U.S., where Bulgaria has a positive trade balance, but also indirect exports — that is, Bulgarian raw materials embedded in products exported by other countries to the U.S. For this reason, the Economy and Industry Ministry’s study includes exports from Bulgaria’s 35 leading trading partners to the U.S., such as Germany, Italy, and other EU countries, Barbalov pointed out. Calculations were also made for third countries, where tariff impacts would differ, he added.

The group of goods that would be most affected by the potential new tariffs will be more precisely identified after the final decision is announced. For now, Bulgarian exports to the U.S. that would be directly affected include steel, aluminium, medical instruments and devices, certain measuring instruments, engines, electrical transformers, and electrical machinery and equipment. The Deputy Minister emphasized that about 30% of Bulgarian exports are consistent in terms of product types, while the remaining 70% have varied over the years — which he said is an advantage for the country. Another positive is that most exported goods to the U.S. are not for direct end consumption.

State support is focused on offsetting the decline in Bulgarian exports to the U.S. by diversifying exports to third countries. “Our task as the ministry responsible for international trade policy will be to help Bulgarian producers and exporters find strong markets for their products if exports to the U.S. are reduced,” said the Deputy Minister. Mechanisms include Bulgarian trade offices abroad, business forums in Bulgaria and in other countries, where the affected sectors will be promoted. The Deputy Minister added that discussions are ongoing with EU and Asian countries — including China, where a significant Bulgarian delegation recently visited and discussed boosting trade relations.

There are also countries where the impact of U.S. tariffs would be less severe — such as the United Kingdom and Turkiye — where Bulgaria also intends to increase its trade engagement, the Deputy Minister said.

Bulgaria is not expected to experience a serious impact on imports of U.S. goods in the event of a reciprocal response from the EU. “Our imports of American goods are not significant, and there are ways to substitute those products,” Barbalov said.