HGK: The European Union Had No Alternative to Introducing Countermeasures

The European Commission today introduced its countermeasures in response to American tariffs on imports of steel and aluminum from the EU, which came into effect today. Existing countermeasures against the U.S. that were suspended in 2018 and 2020 will be activated on April 1, targeting a range of American products such as motorcycles, bourbon, and boats.

New U.S. tariffs on steel and aluminum products could have a destabilizing effect on the European Union’s economy, but according to currently available data, a significant direct impact on the Croatian economy is not expected, emphasize the Croatian Chamber of Economy.

In 2024, steel and aluminum products accounted for 1.5 percent of Croatian exports to the U.S. However, there is a certain indirect impact when tariffs reflect on orders from our strongest partners, such as Germany, Italy, and Austria.

– The main challenge for the European steel industry is how to compensate for the expected decline in exports to the U.S. The American market is important for European steel producers – lost export volumes are difficult to redirect to other export markets. We expect that China will benefit the most from this trade war, as it will find it even easier to export to the EU, said HGK Chief Economist Goran Šaravanja.

The U.S. Among the Most Significant Croatian Export Markets

The European Union decided on countermeasures to protect the European economy, which entails a rise in product prices subject to tariffs and a decline in the volume of trade exchange. Šaravanja believes that the introduction of tariffs is an expected move by the new administration, but it is also undoubtedly harmful to the economies on both sides of the Atlantic. The European Union had no alternative to introducing countermeasures; a lack of response would be interpreted as weakness.

– However, we see that the American administration inconsistently introduces tariff conditions, postpones their implementation, or completely abandons them. The EU needs to show patience, monitor the further development of the situation, and negotiate with the aim of suspending American tariffs from the position of a strong economy with which the U.S. has the strongest bilateral exchange. The introduction of these and potentially new tariffs is even more unfavorable when we consider that the U.S. is one of Croatia’s leading trading partners. The importance of the U.S. market for the Croatian industry increased in 2024 when the U.S. moved up one position to eighth place on the list of the most significant Croatian export markets, emphasized Šaravanja.

Croatia primarily exports medicines, immunological products, transformers, weapons, and other high value-added products to the U.S., rather than raw materials or semi-finished products as is the case with some other countries. In addition to goods exports, last year alone, revenues from service exports from Croatia to the U.S. amounted to nearly 700 million euros. The most services were exported from the tourism sector, the IT industry, and consulting services.