Analysis: Possible US tariffs on EU goods could affect Kosovo's exports

Kosovo's exports to the United States have been largely stable, but President Donald Trump's announced tariffs on EU goods could also increase production costs for Kosovo companies. Frutex, a Kosovo-based company that produces soft drinks and energy drinks, began exporting to the United States in 2019. At the time, the value of its exports exceeded $40,000 and last year reached over $100,000.

"The value, again, is not that great, since it is not easy to penetrate a market where competition is strong. However, we are also satisfied with this, which comes thanks to the large Albanian community in the US ," the company's owner, Shaqir Palushi, tells Radio Free Europe.

Economic organizations say that since 2019, Kosovo's overall exports to the US have actually begun to increase, due to the increase in product quality.

This is also shown by Kosovo Customs data, according to which their value in 2019 was three million euros, while three years later it reached over 131 million. Before that time, however, it was significantly below three million.

Radio Free Europe asked the Ministry of Industry, Entrepreneurship and Trade why there was a significant decline in exports to the US last year, but as of the middle of last week it had not received a response.

Products that Kosovo exports to the US include: food, beverages, textiles, mattresses, but also wood and plastic products. American goods in the Kosovo market are mainly products of animal origin, textiles, fuels, means of transportation and others.

Kosovo has a small manufacturing industry, but some local companies have managed to export quality products to international markets, says the president of the Kosovo Chamber of Commerce, Lulzim Rafuna.

According to him, the factor that has influenced the increased presence of Kosovo goods in the US - one of the largest markets in the world - is the General System of Preferences (GSP).

This is a US trade program that allows developing countries to export certain products there without paying customs duties. Kosovo has been benefiting from it since 2012, when it was enabled to export around 3,500 products from various sectors to the US without being subject to customs duties.

"In 2019, we had several companies that took off and increased their production in Kosovo and abroad. Exemption from customs duties is a beneficial thing for them," Rafuna tells Radio Free Europe.

This is also confirmed by Palushi, who says that for the export of his goods to the US, he only pays the cost of transportation.

"Non-payment of customs duty makes our product competitive with other products," he says, adding that the application of customs duty would bring about a different situation.

And, such changes may not be far off, especially after warnings from US President Donald Trump that his country will soon impose tariffs on goods it imports from the EU.

This has prompted a response from the bloc - the world's largest single market, on which Kosovo also depends. European Commission President Ursula von der Leyen has said that such "unjustified" tariffs would trigger "proportionate countermeasures".

Rafuna says that if the US implements these tariffs on EU products, and vice versa, they will indirectly affect the Kosovo market.

This is because Kosovar companies depend on importing various products from the European market.

"If a raw material comes from the US to a German company with a higher customs tax, that raw material will become more expensive. And, when our company buys the final product from that raw material that was imported from the US, it will undoubtedly be more expensive," explains Rafuna.

Sejdi Rexhepi, lecturer in International Economics at the University of Pristina, shares a similar opinion.

According to him, Kosovo's economy is import-intensive and feels every change that world markets undergo.

"Our companies will be forced to buy at higher prices. This, of course, will be reflected in the increase in import prices and risks also reflecting in the general increase in prices in Kosovo," Rexhepi tells Radio Free Europe.

According to the Kosovo Agency of Statistics, last year the country imported goods worth over 6.3 billion euros, while exporting 941.3 million euros.

Goods worth around three billion euros, or around 45 percent of the total, were imported from the 27 EU member states - ranging from food products to construction materials.

Kosovo's exports to EU countries, meanwhile, were worth 294 million euros, or about 30 percent of the total.

Kosovo's main trading partners in the EU, both in exports and imports, are: Germany, Italy, Austria, France and Greece.

Palushi says that even if the implementation of the American tax on EU goods begins, he will not stop exporting, but that his products will certainly be at higher prices.

"I believe that consumers, especially Albanians, are willing to pay for them," says Palushi./REL