Croatian officials: Tariffs unlikely to have direct impact but wider effects could trickle down

After US President Donald Trump announced sweeping tariffs last night, sending global markets plunging, Croatian officials and business leaders said Thursday the levies will not have a significant direct impact on the Croatian economy but negative effects may trickle down if Croatia’s major trading partners are affected. 

Last year, Croatia exported nearly 800 million euros worth of goods to the US. Most of those imports were pharmaceutical products, which appear to be exempt from the tariffs. However, Croatia may not be able to avoid a chain reaction if the tariffs trigger a recession in countries such as Germany.

Given that the EU has a common trade policy, Prime Minister Andrej Plenković said Croatian officials will raise Croatian interests during the EU-level discussions on drafting countermeasures.

"This is a decision that could have greater global consequences than it will have a direct impact on the Croatian economy. However, there is always the danger of a chain-reaction that is felt down the road,” said Plenković.

The head of the Croatian Employers' Association Irena Weber says the greatest danger Croatia faces is if the tariffs have a major impact on Croatia's largest trading partners.

"We have to be really careful because indirect effects could come if this triggers a recession in our strongest trading partners like Germany, Italy, Slovenia, and other countries with which we have a strong trade relationship,” said Weber.

The head of Croatia's central bank, Boris Vujčić says the tariffs will not threaten Croatia's financial system but could lead to higher inflation.

"What could happen is that high tariffs lead to a slower economic growth. Furthermore, retaliatory measures could fuel inflation,” said Vujčić.

European Commission President Ursula von der Leyen described the tariffs as "major blow to the world economy" and said the bloc is preparing countermeasures.

"I know that many of you feel let down by our oldest ally. Yes, we must brace for the impact that this will inevitably have. Europe has everything it needs to make it through the storm. We are in this together. If you take on one of us, you take on all of us,” said Von der Leyen on Thursday.