Ivan Mihaylov (AMCHAM) to FACTI: Tariffs are destroying established successful economic and trade models

US President Donald Trump has made greater demands in trade negotiations with the EU, insisting that any possible deal with the bloc should provide for minimum tariffs of 15-20% in every deal with the bloc. This is reported by the British Financial Times. The US President's stricter position aims to test the threshold to which the EU is willing to make concessions. What does the US look like in Trump's second term… Ivan Mihaylov, CEO of the American Chamber of Commerce in Bulgaria (AMCHAM), speaks to FACTI.

- Mr. Mihaylov, Europe vs. the US in an economic war… We hear from US President Trump about 30% tariffs for the EU. What is happening…
- Since taking office on January 20, 2025, Donald Trump has been striving to fulfill his promises made in the election campaign that brought him victory. We see that he also aims to build on what was accomplished in his first term in 2017 – 2021. Therefore, it is correct to point out that the US is the leading country on the topic of tariffs. The explanation is that through the imposed tariffs, a balance is sought or a reduction in the trade deficit between the US and the EU. Usually, the analysis goes through indicating the tactical methods that Trump uses – a strong public announcement to secure a better position in the negotiations – because negotiations will inevitably come – and so that every subsequent action can be seen as successful.
But the important point in putting the cards on the table is to consider that the Transatlantic Economy, which amounts to 9.4 trillion US dollars, contains both the two-way direct trade (import-export) between the US and the EU, and the direct sales of US companies to the European market and vice versa. The 2025 report shows that direct sales are related to the export figures between the two economies in a ratio of 3:1. In short - the benefits of the economic activity of American companies in Europe are many times more beneficial for the United States than raising tariffs on imported goods to America.
The American chambers have repeatedly pointed out that tariffs destroy established successful economic and trade models, and that in the end consumers will have to pay the price (if the same goods are available at all).

- Are tariffs for everyone making “America great again“. Where is Trump's policy leading?
- The slogan contains the renewed ideology of America – because “Making America great (again)“ has been the slogan of other US presidents. But in 2025, the White House administration is developing it in three key aspects - the activity of the government and businesses is to make America stronger, safer and more prosperous. And this is important for understanding its actions by European partners and adapting to the new game. Which also applies to Bulgaria, as we can only position our country well in front of our American partners.

- Do European companies know what the tariff will be for the US tomorrow. How is business done today…
- This is a question of critical importance, because the speed with which certain tariffs are proposed and then postponed for another period does not provide any stability for companies in the US, nor for those in Europe, Canada, Mexico.
Here we have already seen that the victims are the manufacturers of complex equipment, whose parts must cross the borders of the US, Canada or Mexico several times, as well as those in the EU. And again - this led to the retention of production, to the delay of its entry into the market with certain expectations from consumers and with already concluded contracts.
This also led to innovative ways to circumvent these tariffs. The new Airbus ordered by “Delta Air Lines“ flew from Toulouse via Tokyo to Atlanta, instead of flying directly across the Atlantic, so that the aircraft could no longer be considered new and not subject to customs duties.

- Which US goods will the EU impose tariffs on?
- European Commission data show that trade between the EU and the US is balanced. The difference between EU exports to the US and US exports to the EU is €48 billion in 2023, which is only 3% of the total value of trade. Also, the taxes levied on American goods and services are on average about 1%, and for cars from the US they reach 10% and the principle of most-favoured-nation treatment by the EU is applied to them.
From this point of view, although it is not an ideal scenario, the imposition of reciprocal duties only escalates tensions between the countries. But given the circumstances, it is an expected and even inevitable move. Therefore, it is used as a reaction and a show of force by the EU.

- Stock markets react to Donald Trump's words every day. Is this deliberately provoked by the American president, or is it a move with a long-term goal...
- Stock markets react to a number of factors, statements or actions, as well as intentions for actions. Whether the current policy of the White House aims to reduce the US national debt in combination with the creation of new jobs, as analysts indicate, or is it aimed at achieving other long-term benefits - this is a question for the Trump administration itself.

- We see much more aggressive trade relations from Trump, if we compare him with his first term. How has he changed, what does he aim for…
- The heightened trade rhetoric and actions in Trump's second term are rooted in the domestic political dynamics and relations in the United States. The opposition between Democrats and Republicans on a number of fundamental issues for American democracy and the political system has also led to the understanding that America is weak because it has opened its market to goods not produced in the United States. Trump has promised to fix this in his own way.

- In domestic politics, Trump is trying to reduce the US debt, but his tools affect the entire world. How long will this last?
- It is difficult to make a forecast here in a world where the US president changes or amends his position in the current week. The fear that one often acts and then analyzes is present. In addition, the effect of the “trial and error“ approach in international economic relations is not productive in the system that has been established for years and brings mutual benefits, especially in that of the Transatlantic economy.
The horizon of the pessimists extends until the end of Trump's term in 2028. While optimists believe that the internal balance of power in the US Congress will change with the midterm elections in the fall of 2026. These are the frameworks of the forecast periods, unless there is a large-scale crisis or another “black swan“.

- Despite the tariffs, business continues to operate - imports to the US continue, exports from Europe - too, but business loves security, and there is none today?
- Yes, that's right. Business loves pragmatism and predictability, and this mainly concerns the regulatory and legislative framework, access to the labor market and to raw materials and capital, so that it can do its main thing - generate added value in a sustainable way for its customers and stakeholders.

- The big question is how this increase in cost will be transferred to the end user. What are your predictions?
- The logic of tariffs is such that the bill is paid by the final object in the supply chain. And in an economy oriented towards consumption, this is … the final consumer. And this already leads to a reorientation or contraction of consumption and a change in habits.

- How is Bulgaria doing against this backdrop. How are American investments developing in our country?
- The good news against the backdrop of the issue of Trump's policies and the instability of the Bulgarian political system is that we are managing to retain American investments in our country. Currently, the efforts of the American Chamber of Commerce in Bulgaria and the government are to renew the Strategic Dialogue between Bulgaria and the USA, to seek new opportunities in strategic sectors, such as energy, defense, healthcare, digitalization (artificial intelligence factories), infrastructure, which can be implemented in our country. This is a long-term strategy that, similar to what was said about the USA, requires predictability and real stability of the regulatory, political and legal environment in our country.

- In what areas can we be interesting for the USA?
- Bulgaria has a key position in the region thanks to its strategically located geographical center and stable economy. Nowadays, the USA can develop a partnership with Bulgaria in several priority areas - data centers and those for artificial intelligence, energy, energy transformation and mineral resources, as well as in the field of the defense industry and space.