November the 7th, 2024 – Donald Trump is set to be the president of the US, again. How will his return to the helm across the pond affect US-Croatia relations?
As Marija Brnic/Poslovni Dnevnik writes, considering past experiences and his pre-election programme, the victory of Donald Trump in the American elections should provide the US economy with a kick up the proverbials. Above all, Trump’s mission is apparently the economic strengthening of the USA, the return and protection of domestic production and the tax relief of the economy.
The key announcements for the US economy and the financial sector were the reduction of the corporate tax rate from 21 to 15 percent (in the first mandate, corporate tax was already reduced from 35% to 21%), and the increase of customs duties on all imports by at least 10 percent. With the fact that Trump is particularly harsh towards imports from China, for which customs duties should be significantly higher, even up to 60%.
Before the election, Trump’s possible victory was commented on in the mainstream media primarily in the context of the possible incitement of further global geopolitical chaos and wars, but in his victory speech he emphasised stopping wars as his main task.
Instead of war crises, which, contrary to perception, in the past Republicans were not inclined to, Trump intends to put his focus on stopping wars, which weaken the economy. Such a policy of the new/old leader in the USA has been positively received by investors. After the announcement of the results, the market reacted well; the dollar strengthened, Wall Street jumped, and bitcoin reached a record value.
how will the election of trump affect us-croatia relations?
The first reactions to Trump’s victory from economic circles across Croatia are mainly focused on the issue of customs duties. With them, Trump intends to protect the competitiveness of US-based manufacturers, primarily from China. However, according to announcements, European products will not be spared either, even though they come from allied countries.
the usa is the 17th largest investor in croatia
It’s currently unknown how trade with the USA will look in practice next year. Indeed, how Trump will carve out new US-Croatia relations is yet to be seen. We don’t yet know whether and to what extent customs duties will be applied to products placed on the US market. Croatian producers hope that the EU and the USA will manage to find a common interest. However, only a few are ready to comment and evaluate possible changes in business on the American market just yet.
“Donald Trump is first and foremost a businessman, and I expect that this issue will be followed by business negotiations, fair trade and a fair agreement on reciprocity,” said Željko Pavlin, the head of Karlovy Vary arms manufacturer HS Produkt, which is also one of the main Croatian exporters of American weapons. This year, he added, their sales across the pond in the USA have grown strongly (about 30%), which isn’t unusual before the elections in the USA. However, he added, the demand has greatly increased due to the general level of uncertainty.
Pliva is also the largest exporter to the American market, and last year the Zagreb-based company Končar Mjerni transformatori performed well in the USA. In total, in seven months of this year, 443 million euros worth of goods from Croatia were placed in the USA, which is an over 40% better result on an annual basis.
The strong growth of imports in recent years was due to LNG, which, according to available data, still dominates the total imports from the USA, accounting for about 80% of its value. The LNG terminal project on Krk, which was pushed during the first presidential term of Donald Trump, is most responsible for the increase in trade and economic relations. According to American diplomatic sources, the expansion of its capacities on the island of Krk is still one of the important projects in which the US is interested in with regard to Croatia.
According to official Croatian National Bank (CNB) data, the USA is the 17th investor in terms of FDI value, with 629 million euros invested since 1993. It is estimated that only about a quarter of that capital came directly from the USA, mainly through smaller investments, while large American multinational companies made investments through their subsidiaries based here in Europe.
The latest major investment, as well as the largest, is the Centre of Excellence for the production of medical prosthetic parts and microchips, as well as motherboards for the automotive industry. Then we have the large project of the Jabil company in Osijek, worth around 100 million euros. Along with Fortenova, Jabil should become the largest employer in all of Slavonia, with about 1500 employees.
The Three Seas Initiative
Among the projects whose implementation is underway are the construction of the Centre for the Treatment of Malignant Diseases in Zabok, the factory for innovative biological drugs in Savski Marof, which is being built by Pfizer and the Swedish Sobi, and the construction of the new data centre of the American Digital Realty in Jankomir, Zagreb.
The USA’s current interest is the Southern Gas Interconnection project, which would be the connection of the Krk LNG terminal with Poland and the provision of gas for Central Europe. It is part of the projects created within the so-called The Three Seas Initiative, which was once launched by Poland and Croatia and brings together a total of 13 EU members, and which was supported by the USA in 2017. The USA supported it owing to Europe’s decided move away from the Nord Stream and dependence on Russian gas.
However, it is the Initiative that envisages not only energy, but also the transport and political connection of these countries. Analysts believe that following a Trump victory and a potential boost for US-Croatia relations, Croatia now has the opportunity to embrace this Initiative more strongly. It will also play host to the Initiative’s summit in 2026.
For Croatian entrepreneurs and enterprises, there is another important issue that crops up when it comes to US-Croatia relations. It is a burning one and one they hope will be dealt with at the very beginning of Trump’s mandate, and that is the ratification of the treaty on the avoidance of double taxation. It was signed between the two countries two years ago, but is still awaiting ratification by the US Senate. According to insiders, this process can take up to a decade, and for Croatian companies it would represent an important stimulus and simplification in doing business on the American market.
