US import tariffs have damaged Slovenia’s pharmaceutical trade, slicing hundreds of millions of dollars off exports and weighing on an already slowing economy, the European Bank for Reconstruction and Development (EBRD) said in its latest regional outlook published on September 25.

“US imports from Slovenia declined by around $830mn – equivalent to 1.1% of Slovenia’s annual GDP – mostly on account of medicines highly integrated in a supply chain with Switzerland,” the EBRD said in its Regional Economic Prospects report, noting that Swiss-branded drugs face some of the steepest US tariffs.

Overall US imports from EBRD regions spanning Emerging Europe, Central Asia and parts of Africa and the Eastern Mediterranean, grew 8% in the first half of 2025,  which the development bank attributes to front-loading in the first quarter of the year. 

However, the impact varied widely between countries, with Slovenia suffering the worst damage. “As a highly open economy, Slovenia has been affected by the indirect trade effects of higher US tariffs on the EU and Swiss economies,” the report said.

The blow comes as Slovenia’s economy loses steam. Growth slowed to just 0.1% year-on-year in the first half of 2025 from 1.6% in 2024, dragged down by weaker investment, industrial output and construction. “The growth projection for 2025 has been revised down to 0.7 per cent, with downside risks,” the EBRD said, though it expects a rebound to 2% in 2026 as investment recovers.

Despite the slowdown, consumer spending showed signs of resilience. “Both private consumption and investment recovered in the second quarter after a much weaker first quarter,” the bank said, adding that real wage growth remained strong at 5.3% and unemployment fell to 2.9% in July. Inflation ticked up to 3% by August and the central government deficit more than doubled to 2.4% of GDP in the first half.

Pharmaceuticals are a pillar of Slovenia’s export economy, accounting for a large share of its high-tech output. The industry, led historically by domestic firms Lek and Krka, has drawn heavy investment from Swiss giants Novartis and Sandoz over the past two decades. That partnership helped make Slovenia one of Europe’s top drug producers per capita and a critical link in Switzerland’s global supply chains.

The EBRD said that a 39% US tariff on imports from Switzerland could in theory create “an opportunity for Slovenia to increase direct exports to the US”, but warned that “trade uncertainty remains high and the domestic value-added component remains low in the case of processing of Swiss-branded pharmaceuticals.”