Western Balkans hit with highest US tariffs in Europe, increased protectionism to weigh on growth

The Western Balkans have been hit by some of the highest individualized reciprocal tariffs by the US. With exports to the US accounting for less than 2% of the total in 2024, the direct impact will be limited. Instead, the indirect impact from the US’s tariffs on the EU is likely to be more significant in dampening industrial activity and growth in the Western Balkans in 2025.

On April 2, 2025, US President Donald Trump declared a national emergency, imposing a minimum 10% additional tariff on all US imports from the world, beginning Apr. 5. It was also announced that  “individualized reciprocal higher tariffs” will replace the baseline 10% rate for the 60 “worst trade offenders” from April 9.

Aside from the EU, the US will impose higher reciprocal tariffs on several other European trade partners, including Western Balkan nations. The 37% tariff imposed on Serbia puts it among the highest in Europe, with only six countries around the world facing a higher tariff level. Bosnia and Herzegovina is facing a 35% tariff, followed by 33% for North Macedonia and 31% for Moldova. The standard 10% tariff will be imposed on Albania, Kosovo and Montenegro.

Certain items exempt from reciprocal duties include copper, pharmaceuticals, semiconductors, lumber, bullions, energy, and minerals not available in the US. Steel, aluminum, and automotive goods will be subject to 25% Section 232 duties instead.

Outlook

While the level of tariffs imposed on Western Balkan economies is high, the direct impact is likely to be limited as exports to the US accounted for less than 2% of the total in 2024. Nonetheless, certain industries will be directly impacted, including automotive, electrical machinery manufacturers, munitions producers and agriculture.

The indirect impact stemming from these economies’ integration into European and global supply chains pose a bigger threat to their growth outlook. Some of the key sectors likely to be hurt indirectly via higher tariffs on the EU include electrical and mechanical machinery, chemicals, rubber article, and furniture.

For the Western Balkans countries, the impact of 20% tariffs on their main trading partners within the EU, including Germany, Italy, Romania, Croatia and Bulgaria, will have the more significant direct impact. Weaker EU industrial demand would result in a downward revision to growth projections across the region in our May forecast update.

Trade in services with the US, not affected by the tariffs, is more significant for the Western Balkan countries. For Serbia this means its export of ICT services to the US, the largest market for such activities and making up the largest segment of Serbia’s services exports worth around €1.7 billion in 2024, will remain unaffected by the current regime. ICT services is also one of the fastest growing sectors in North Macedonia, generating €0.5 billion in exports in 2023, with US also being one of the largest export markets.

The imposition of US tariffs comes against the backdrop of a political standoff in Bosnia and Herzegovina, where state authorities have issued an arrest warrant for Bosnian Serb leader Milorad Dodik, persistent anti-government protests in Serbia, and protests in North Macedonia over the Kočani nightclub fire. The socioeconomic fallout from the tariffs carries the risk of further fueling public discontent, which has ramifications for security and political stability in the region.

Moldova is already grappling with a 72% weighted-average tariff surge on its electricity imports from Romania owing to an energy crisis since the beginning of 2025. Increased global protectionism adds further headwinds to its trade outlook. The government’s focus is likely to remain on maintaining support for the Party of Action and Solidarity, founded by the incumbent president, ahead of the next election, due by Oct. 11, 2025, through subsidies and financial assistance for low-income households to offset increased energy costs.

Sascha Ostanina, Principal Analyst, contributed to this report

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.