Croatia Exports Medicines and Arms to the US – Challenges Ahead
by Marko Barišić – Zagreb. This article explores the impact of Croatia tariffs on local businesses and the economy. The recent changes in Croatia tariffs have significant implications for trade and business operations.
The decision by US President Donald Trump to impose draconian tariffs on a significant portion of global imports has impacted Croatia. This includes a 20% levy on goods from the European Union.
While the effect may not be as severe as on other major exporters to the US, numerous Croatian companies trading with America could face difficulties due to Croatia tariffs. This may last at least initially. Until they reorient towards alternative markets affected by Croatia tariffs.
The Figures
According to the latest data, Croatia exported goods worth just over $736 million (USD) to the US in the first 11 months of 2024. This marks a notable 39.5% increase compared to the previous year. The year before that, Croatian exports to the US surpassed €1 billion. Growth soared by 47% annually. Notably, Croatia’s robust IT sector, for which the US is its largest foreign market, has contributed significantly to this trend despite Croatia tariffs.
“The US ranks among Croatia’s top 10 export destinations and is our eleventh most important overall trading partner,” remarked Luka Burilović, President of the Croatian Chamber of Commerce, recently.
Per Chamber of Commerce figures, Croatia’s primary exports to the US include pharmaceuticals, immunological products, transformers, armaments, food items, wines, and other goods. Crucially, these are high-value-added products. This is despite the challenges posed by Croatia tariffs. This contrasts with the raw materials or semi-finished goods typically exported by some other nations.
Beyond physical goods, analysts note that Croatian service exports to the US—spanning tourism, IT, and consultancy—generated nearly €700 million last year alone. This indicates the significance of overcoming Croatia tariffs.
Arms Exports in the Crosshairs
Among Croatia’s key exporters to the US is Karlovac-based HS Produkt. This firm specialises in firearms such as rifles and pistols. Its Echelon pistol, marketed in the US under the Springfield Armory brand, was hailed as Guns & Ammo magazine’s 2023 “Handgun of the Year.” It was praised for setting “new standards for modern pistols.” Similarly, the Hellion (“Nestaško”), a semi-automatic rifle derived from Croatia’s battle-proven VHS-2 assault rifle, is sold in the US as a modified civilian version. Springfield Armory touts it as “the Croatian rifle tested in combat.” This rifle is deployed by Croatian soldiers worldwide, further affected by Croatia tariffs.
Having painstakingly secured a foothold in the demanding US market, HS Produkt now faces uncertainty due to the tariffs. The company warns it may lay off nearly half of its 2,000 employees if Croatia tariffs persist. Smaller suppliers are also at risk. Owner Željko Pavlin has publicly urged the Croatian government to act independently of the EU. He suggests negotiating exemptions with the Trump administration, citing the “unique nature” of their products.
Pharmaceuticals: A Glimmer of Hope?
Croatia’s pharmaceutical exports, including those from Pliva (now owned by Israel’s Teva), may yet secure tariff exemptions. This could be potentially aided by Teva’s international leverage. Conversely, firms like Podravka or Atlantic Group—whose US exports form a minor share of total trade—anticipate limited fallout. This holds true even with Croatia tariffs.
Government Response and EU Dynamics
Prime Minister Andrej Plenković acknowledged engagement with affected companies. He stated Croatia would “seek to mitigate consequences through dialogue with the US.” However, he emphasised awaiting the EU’s coordinated response. This body will first analyse the tariffs’ economic impact before enacting countermeasures against Croatia tariffs.
Uncertain Horizons
While Croatia’s overall limited trade with the US may spare it major economic damage, high-value exporters like HS Produkt risk significant disruption. This is particularly true if tariffs trigger a European recession due to the implications of Croatia tariffs.
For Croatia, the timing could hardly be worse. This blow lands just as the nation’s economic prospects were beginning to brighten.