The United States, under the leadership of newly elected President Donald Trump, is on the verge of a trade war with Canada, Mexico and China. Furthermore, Trump has introduced 25% tariffs on steel and aluminium imports from all countries to protect domestic production and reduce the trade deficit.
The consequences of this move could be far-reaching, and experts believe that Serbia could become collateral damage in this global trade conflict, especially given its strong ties with Beijing. Several major Chinese companies operate in Serbia, both as owners of strategically important firms and as contractors in infrastructure projects.
Just 15 days after Trump officially took office on 20 January, Washington imposed a 10% tariff on Chinese imports. This move fulfilled Trump’s threats that “any country threatening American jobs, economic stability, and national security” would face such punitive measures. Many experts argue that this trade war between the US and China has actually been ongoing since 2018, during Trump’s first term, when similar tariffs were imposed by both sides.
China’s response was swift. Within minutes of the US tariffs taking effect, Chinese officials announced retaliatory tariffs on American goods—a 15% tariff on US coal and liquefied natural gas imports and a 10% tariff on crude oil, agricultural machinery, and large-engine vehicles.
Beijing also announced an antitrust investigation into Google, one of the biggest US tech companies, and several American firms were added to China’s “unreliable entities” list, which now includes dozens of US companies. Entities on this list are banned from operating or exporting goods to China. Additionally, China imposed export controls on 25 rare metals, some of which are crucial for key electronic products and military equipment.
Given that President Trump has also threatened other countries—including Mexico, Canada, and the European Union—there is growing concern that the world is on the brink of a new global trade war. It is easy to conclude that no one would benefit from such a conflict. Increasing tariffs on one side inevitably leads to retaliation on the other, and in such battles between global superpowers, small and economically weaker countries like Serbia tend to suffer the most. This is why it is crucial for Serbia to avoid being caught in the middle of a trade war between the US and China, especially since Belgrade maintains good relations with both Washington and Beijing.
Economic consequences for Serbia
Professor Predrag Bjelić from the Faculty of Economics in Belgrade told NIN that any disruption in global trade inevitably leads to rising prices and increased inflation.
“If a trade war were to break out, it would negatively impact economic trends in Serbia and drive inflation up. This would be particularly problematic as our country currently enjoys strong economic ties with all major global players, including the US, the EU, and China. If tariffs were to rise, maintaining the same level of relations with all parties would no longer be possible. Economic blocs would form, and Serbia would have to align itself with one of the opposing sides. Furthermore, since Serbia’s largest trading partner is the EU, any negative impact on the European economy would automatically affect Serbia as well,” explains Bjelić.
However, Bjelić does not believe that major global disruptions will occur, as he doubts Trump will fully carry out his tariff threats.
“I think Trump will ultimately choose negotiations rather than escalating trade conflicts, as such a war would not benefit the US either. His goal is to secure the best possible negotiating position, which is why he is currently ‘flexing his muscles’ to demonstrate his determination. However, since a global trade war benefits no one, I believe that the situation will eventually be resolved through negotiations. Some countries may face tariffs, but not all those Trump has mentioned,” Bjelić said.
Impact on global markets and Serbia
Financial markets, which have been betting on avoiding a trade war, are now fearing a sharp global economic slowdown, renewed inflationary pressures, and a halt to interest rate cuts by the US Federal Reserve. These factors significantly impact the global economy, including Serbia’s economic stability.
Dragoljub Rajić, coordinator of the Business Support Network, told NIN that the outbreak of a global trade war would lead to higher prices, rising inflation, and increased difficulties for businesses, primarily affecting small and poorer countries, which would face severe economic challenges.
“Trump represents the interests of the traditional wing of the American Republican Party and the domestic business lobby, whose goal is to reduce imports through administrative measures. If tariffs were introduced on goods from a larger number of countries, primarily those from Europe, prices of various products would inevitably rise, inflation would increase, and both purchasing power and the standard of living of American citizens would decline. A trade war would also disrupt the operations of leading American companies, as higher tariffs would increase their production costs,” explains our interlocutor.
According to him, such a conflict would have a highly negative impact on Serbia’s economy and efforts to keep inflation at an acceptable level that does not threaten the livelihoods of citizens.
“In that case, prices and inflation would rise, creating a significant problem for economic activity in the country. Higher tariffs would also lead some investors to withdraw from Serbia due to reduced turnover and lower production volumes. Citizens would experience price hikes through increased living costs, making it clear that a global trade war would bring no benefits, only numerous difficulties,” says Rajić. However, he emphasises that it is necessary to wait and see what actions the Trump administration will actually take in the next six to twelve months.
“During Trump’s first term, we also saw his attempts to immediately demonstrate that he would fulfil his key campaign promises, which focused on protecting American jobs and strengthening the role of domestic industry. However, it is well known that Trump is capable of abandoning his initial agenda and adopting a different course over time. Therefore, we must wait to see whether he will truly change strategy regarding trade relations or whether his current statements are merely a bluff that will ultimately lead to negotiations with major competitors, thus removing the threat of a tariff war,” says Rajić.
Economist Saša Đogović also believes that entering a global trade and tariff war would create significant problems not only for smaller and more vulnerable economies but also for the United States itself. He told NIN that the introduction of tariffs, which Trump heavily promoted during his election campaign, would almost certainly make controlling inflation more difficult and cause a range of economic problems in the US, potentially even leading to a recession.
“If Trump follows through on what he promised during his presidential campaign, meaning the introduction of tariffs, which has been speculated could also affect European Union countries, this would negatively impact inflationary trends in the US and create conditions for rising inflation. Higher prices would certainly reduce citizens’ quality of life and have a negative effect on the American economy. Tariffs would also prompt some companies, particularly in the industrial sector, to relocate production to other countries to avoid high import duties,” our interlocutor explains. He emphasises that Trump is unpredictable and frequently changes his positions, so it remains to be seen whether his administration will actually implement what was announced during the campaign.
(NIN, 19.02.2025)
https://www.nin.rs/ekonomija/vesti/68377/sudbina-srbije-u-ekonomskom-sukobu-sad-i-kine-kolateralna-zrtva-svetskog-carinskog-rata
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Publish date : 2025-02-19 11:02:00
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