Bulgarian companies should prepare for a decade of elevated US tariffs, which are currently seven to eight times higher than in 2024, according to the Economist Intelligence Unit (EIU). Analysts warn that these tariffs, likely to persist for the next 10 years, could not only restrict access to the world’s largest economy but also trigger broader structural shifts in global trade.

While the United States is not Bulgaria’s primary trading partner, the impact of 10–15% tariffs on EU importers of Bulgarian goods - including Germany, Italy, Romania, and Turkey - would be significant. The EIU notes that even if a new US administration takes office, a reduction in tariffs appears unlikely due to the newly established infrastructure for collecting these duties and a bipartisan consensus favoring economic nationalism. European attempts to renegotiate exemptions or strike a new trade agreement may fail, and retaliatory tariffs from the EU would likely have minimal effect.

The forecast suggests that EU heavy industry sectors, already weakened by high energy costs, may face further setbacks, forcing production cuts or relocation. For Bulgarian businesses, this scenario implies the need to diversify export destinations, focus on markets beyond the US, and shift up the value chain to higher-margin products.

Companies are advised to monitor EU policies closely and pursue strategies to mitigate operational risks, such as subsidies, trade diversion, accelerated investment in EU-based demand responses, and expansion into green technologies. Another potential challenge is the escalation of EU–China trade tensions, which could arise from European efforts to secure supply chains and implement protective measures. Such a conflict could increase costs, reduce investment and trade, limit access to European financial flows, and expose EU companies in China to retaliatory actions. Bulgarian firms are encouraged to consider a “China Plus One” model, maintaining core operations in China while diversifying parts of the supply chain to nearby countries.

Recent examples of trade friction underscore these risks. From September 10, provisional duties on pork imports from China, ranging from 15.6% to 62.4%, were implemented. These tariffs follow an EU investigation into Chinese subsidies for electric vehicles, which led to the EU imposing duties up to 45% on Chinese EVs, as well as measures against Chinese tires and brandy imports. Such actions align with the EIU’s long-standing forecast of strained EU–China trade relations.

Despite these global trade challenges, Bulgaria’s domestic economy is expected to remain resilient over the next two years, with strong consumer demand driving growth in 2025. Sectors like tourism, electricity production, and arms manufacturing are highlighted as key drivers. Nevertheless, businesses, particularly foreign investors, are cautioned about political and fiscal risks, including the possibility of a short-lived government, persistent corruption, and weaknesses in the judiciary. The report also flags the potential for a rise in the flat 10% corporate tax if 2025 revenues fall short, combined with a budget deficit exceeding the EU’s 3% threshold. Authorities may opt to maintain social programs while shifting a disproportionate tax burden onto foreign firms, making readiness for audits essential.

Medium and small enterprises face additional challenges stemming from Bulgaria’s lag in digital skills. According to the European Commission’s 2023 Digital Economy and Society Index, Bulgaria ranks 26th out of 27 EU countries for basic digital competencies, affecting cybersecurity and software development capabilities. Companies are advised to hire specialized personnel from abroad and engage with educational and training programs to ensure the workforce meets market demands.