site.btaA Year after Introduction of Higher US Tariffs, Effect on Bulgaria Is Largely Indirect - Analysis

One year after the administration of US President Donald Trump imposed higher tariffs on imports from the European Union, the impact on Bulgaria remains largely indirect, according to an analysis by Coface made public Friday. The report, marking a year of continued transatlantic trade tensions, says the effects on Bulgaria have been transmitted mainly through weakening external demand and mounting pressure on European supply chains, in which the Bulgarian economy is deeply integrated.

According to the analysis, the strongest impact has been felt in industrial sectors such as machinery manufacturing, metals and automotive components, where Bulgarian companies operate primarily as subcontractors for larger European producers.

"The tariffs were not so much a direct shock for Bulgaria as a factor that worsened an already tense external environment through weaker exports, lower industrial activity in Europe and increased uncertainty for businesses," said Plamen Dimitrov, manager of Coface Bulgaria.

As a highly open economy integrated into the European Union’s manufacturing and export chains, particularly those linked to markets such as Germany and Italy, Bulgaria is sensitive to any deterioration in external demand, the company said.

Coface noted that higher tariffs on European exports to the United States have reduced the competitiveness of EU companies, leading to fewer orders for suppliers, including Bulgarian enterprises. Sectors such as engineering, metallurgy and automotive manufacturing, which are strongly represented in Bulgaria, have been particularly affected.

At the same time, the redirection of global trade flows and stronger competition from third countries, especially in Southeast Asia, have increased pressure on prices and profit margins for Bulgarian exporters. This comes on top of rising costs for raw materials and industrial components already affected by tariff restrictions and supply chain disruptions.

As a result, although Bulgaria is not among the United States’ major direct trading partners, the tariffs have affected the country through a weaker external environment, greater uncertainty and increased pressure on industrial sectors, limiting export potential and investment activity, the report concluded.

Coface’s broader global analysis found that most of the costs associated with increased U.S. tariffs have been absorbed by American companies themselves. The company’s macroeconomic team also observed that most exporters to the U.S. have managed to maintain their profit margins, contradicting expectations that they would significantly cut prices to preserve market share.

The report also highlighted a sharp rise in raw material costs in sectors heavily affected by the tariff policies. By the end of 2025, production-cost inflation had reached 20% in metallurgy, 9% in household appliances, 8% in the automotive sector, 6% in machine tools and textiles, and 5% in electronics. In many of these sectors, gross margins have either stagnated or declined, the analysis said.

According to Coface, the trade war is far from over.