Professor Ljubodrag Savić for EUpravo Zato: "Serbia will feel Trump's tariffs more indirectly than directly"

Trump's tariffswill undoubtedly have a major impact on the global economy, and this will be particularly evident in Europe.
The European Union will face higher costs, political tensions, and reduced competitiveness for its manufacturers. Meanwhile, Serbia, which has been hit with a 37 percent tariff by Donald Trump, will be affected to some extent, but it will feel the indirect effects more, primarily through decreased demand for products and rising prices.

Professor Savić is not surprised by Donald Trump's move. On the contrary!

"The world has long lived in a period where economic instruments like tariffs were not in place. A tariff is essentially an economic tool, but like any tool, it has two sides. It is always better for the economy when such instruments are not in force and when the market operates freely. In such conditions, competition naturally increases, production is better organised, and those who are more efficient and competitive perform better. Trump has now taken the first step in this direction, but it also has its negative consequences. He believes that the part of the world that has profited too much in recent years should now pay the price. As the President of the United States, he has decided to introduce new economic measures, which he claims will help domestic producers and create better conditions for them," our interviewee begins.

According to him, at first glance, this seems logical.

"For example, European prices will rise, and Serbia, even though it is not a major exporter, will have to pay additional tariffs of 37 percent, meaning it will have no chance of being competitive in the European market. Although the part of the market that Serbia currently holds will be filled by other producers, American companies will, of course, take advantage of this. However, what Trump envisions—while it may create opportunities for domestic producers—could have negative effects in the long run. Others, such as the European Union and China, will also take similar measures, which means global product prices will rise. This could threaten market competitiveness and functionality on a global level. Essentially, no matter how you look at it, the economic system is much more efficient without such burdens. Trade should be free, and well-organised economies with greater capacity and higher product quality will always be more competitive," says Professor Savić.

No one will be left unaffected

He adds that the world is now in a completely new situation, from which no one will emerge without consequences.

"Everyone will lose to some extent, and the consequences will be significant, especially for those dependent on foreign trade. Trump's measures could increase costs in countries like Serbia, while others, such as EU countries, may benefit from these changes. In any case, it will be a challenge for all. Trump clearly does not make major distinctions about who is affected by his policies. He is guided by American interests, and that is evident," our interviewee emphasises.

As for Serbia, Professor Savić says that there will be no direct major losses, as our trade with the US is not particularly large, but the high tariff rate could certainly impact certain sectors.

However, he points out that there are two additional factors to consider.

"First, Serbia holds a unique position in the region, with exceptionally high tariff rates. The second factor is that high tariffs can hit the market hard, as it will not be able to avoid taxes or other costs that come with such economic measures. Serbia is both politically and economically distinct, and although it is not a member of the European Union, all issues related to global trade, tariffs, and economic policies still affect us. Our strategy must be clearly defined in order to withstand these challenges," the economic expert explains.

He stresses that Europe must recognise that it is in a serious geopolitical and economic position, where it must decide its next steps.

"Russia, China, and the US have far greater power than the European economy can withstand unless a unified and coordinated policy is established. Every decision Europe makes now must be carefully evaluated, as it will determine not only European but also global economic stability. And, as history has shown, only collective action can bring long-term benefits," he said.

Greater indirect than direct damage

"Serbia cannot be competitive in the US market. What Serbia exports is not a large quantity, but regardless of the amount, it is simply not possible to export with a 37 percent tariff and remain competitive in that market. That is just the reality," says Professor Savić.

He believes that the greater damage will come in relation to the European Union.

"Given the major difficulties in placing products on the market, particularly in Germany, Trump is not actually trying to sell American cars in Europe—he is trying to drain the market for European producers. Since our economic indicators are on the rise, this will not have a positive effect on markets, primarily European, but also Chinese and to some extent Russian. Europe will face a challenge as well because if there is no competition from American products, this will affect production capacities in Serbia. Many German companies manufacture parts and components in Serbia. If they stop operating, it is difficult to expect their subcontractors in Serbia to continue working," our interviewee explains.

He highlights that this indirect impact on Serbia’s economy could be far greater than the direct one.

"Although tariff differences range from 25 to 37 percent, the effects of the indirect impact on the Serbian economy will be significant, as all of this will spill over into our production."

The biggest concern for people is how this will affect them. Will it directly impact the products we use every day?

According to Professor Savić, Trump’s measures will undoubtedly have political consequences, as he believes that nothing in this process is separate from politics.

"Only collective action can bring long-term benefits"

"Unfortunately, politics at a global level has a much broader impact than people often realise. Europe is in a major crisis. It is very difficult for it to withstand another blow, such as the one resulting from Trump's decisions. These sanctions and economic pressures only worsen the situation. Although Trump likely has an economic rationale behind his decisions, the political consequences they create could be very serious for Europe. Europe must recognise that it is in a serious geopolitical and economic position, where it has to decide its next steps. Russia, China, and the US have far greater power than the European economy can handle unless a unified and coordinated policy is established," the expert points out.

Professor Savić concludes that every decision Europe makes now must be carefully evaluated, as it will determine not only European but also global economic stability.

"As history has shown, only collective action can bring long-term benefits," is the message from the esteemed economic expert and professor, Ljubodrag Savić.