Trump’s tariffs and the region: What are the consequences, what’s the solution?

In the regional countries targeted by U.S. President Donald Trump with reciprocal tariffs of up to 37 percent—followed by a 90-day suspension before they take effect—the loudest proposals so far suggest either abolishing tariffs on U.S. goods altogether or reaching a “zero for zero” agreement on certain products. Experts point out that if the decision signed at the White House goes into force, companies exporting goods to the U.S. market would essentially be pushed out.

By Dusica Radeka Djordjevic

Instead of the initially announced steep tariffs Trump revealed on April 2 for around 60 countries, only a 10 percent customs rate has so far been implemented—except for China, which has been hit with a 125 percent tariff starting two days ago.

According to the tables Trump presented on what he called the “day American industry was reborn,” the reciprocal tariffs assigned to Serbia amount to 37 percent, Bosnia and Herzegovina 35, North Macedonia 33, and Montenegro, Albania, and Kosovo each 10 percent.

The 90-day pause has now begun.

Like others, the region is hoping for a positive outcome from trade negotiations during this period.

Serbian President Aleksandar Vucic stated yesterday that the goal is to reach an agreement “without any tariffs.” He noted that on the very first day the tariffs were announced, Belgrade contacted U.S. officials and requested a time and place for dialogue. He revealed that advice was given to try to establish regional cooperation to help facilitate the talks.

“We then contacted everyone in the region and established a joint connection. We found common ground and sent new letters. I spoke privately with two American officials, trying to reach the key decision-makers so we could resolve these issues,” Vucic said.

Loss of Competitiveness

Bojan Stanic, Assistant Director of the Sector for Strategic Analyses, Services, and Internationalization at the Serbian Chamber of Commerce, told Kosovo Online that, according to unofficial announcements, a high-level meeting between Serbia and the U.S. is expected in the next month or two. This could yield a sensible outcome regarding the U.S. tariffs on Serbian goods, ensuring the sustainability of Serbian exports to the U.S. market.

Stanic says Serbia is already preparing a delegation to negotiate with the American side, with arguments being bolstered by statistical data and facts illustrating the steady development of economic cooperation between the two countries—covering trade in goods and services, foreign direct investment, and the number of companies established with majority U.S. capital.

“As the European Union proposed, a suggestion could also come from here to completely abolish tariffs between the two countries, especially regarding industrial products, meaning zero tariffs on American products entering Serbia and Serbian products going to the U.S. However, naturally, the American side holds the power position and says it is willing to negotiate only if they receive something of significant value in return,” said Stanic.

According to him, there are about 660 Serbian companies exporting to the U.S., and Serbian goods would no longer be competitive compared to American producers if the 37 percent tariff remains in place.

“The total value of exports in 2024 was 620 million euros, and in the first two months of this year, goods exports reached 100 million euros. These are mostly auto parts and car tires, along with defense industry products such as ammunition and various types of weapons—military or hunting. We also export certain agricultural products, frozen fruits, pet food... Exports are concentrated in the hands of 10 to 15 major exporters, and all companies are concerned about how their goods will be treated in the U.S. Smaller or medium-sized companies that are not part of multinational groups and rely heavily on the U.S. market would be completely wiped out by the 37 percent tariff,” Stanic warned.

Tariff Suspension

A day after Trump announced the tariffs, Kosovo President Vjosa Osmani requested that the government suspend import tariffs on all U.S. goods. Economics professor Shkumbin Misini from “AAB” University in Pristina told Kosovo Online that the proposal was supported by the American Chamber of Commerce and is a positive move.

“This proposal means some imported U.S. products could be exempt from duties or receive a 10 percent reduction. The Kosovo government has proposed certain incentives, but such measures are difficult to implement right now due to weak bilateral relations with the U.S. State Department. Still, we should be pleased that the U.S. imposed the lowest tariffs on Kosovo compared to other Western Balkan countries,” Misini said.

With a 10 percent tariff, he noted, Kosovar products would no longer be sold in the U.S. at previous prices, and production companies that previously exported there would no longer be competitive with domestic American producers. This would automatically reduce demand for Kosovar products, since a 10 percent tariff increases their prices by the same amount. Misini added that companies most affected would be those exporting textiles to the U.S. in large volumes.

“This could immediately lead to a decline in production at these companies, resulting in layoffs and a rise in unemployment in Kosovo,” Misini warned.

Commenting on Trump’s decision to delay reciprocal tariffs for 90 days, Misini said the move can be interpreted as a strategic step toward resolving economic and trade tensions. The delay could serve to ease trade frictions, especially with key economic partners, and give parties time to negotiate more sustainable solutions.

Making Use of the Pause

North Macedonia faces potential tariffs of 33 percent, and economic analyst Abil Baus from Skopje told Kosovo Online that the 90-day delay gives the country additional flexibility in exports and a chance to improve trade relations with the U.S.

“This pause can be used to position Macedonian companies in supply chains looking for alternatives outside high-tariff countries,” Baus said.

According to Baus, technological-industrial development zones would be affected by the 33 percent tariff.

“The U.S. isn’t among the top ten export destinations for us, so we won’t experience a direct economic crisis, but there will be indirect effects on our economy since we have a partnership with EU countries, particularly Germany, which will be directly affected by Trump’s tariffs,” Baus explained. He added that the April 2 tariffs would likely hit the automotive, construction, IT, and food industries.

“The automotive industry will be hit; we’ll feel it here since we have capacities that produce auto parts, construction materials, steel…” said Baus.

Speculative Price Hikes

Economic expert Eduart Gjokutaj from the “Altax” company in Tirana told Kosovo Online that increased supply chain costs from countries affected by U.S. tariffs will impact the economies of import-dependent regional countries. Albania—and even more so Kosovo—are not net exporters but net importers.

“Countries affected by tariffs will take measures to protect their economies by introducing new tariffs or taking other steps. The ripple effect is like waves forming in a pond—the stronger the impact, the wider the effect. Albania, with its favorable position and economic capacity, should act to both minimize negative effects and find opportunities in this situation, which has both downsides and upsides,” Gjokutaj explained.

The negative impact, he said, will be inflation, including speculative price hikes that will affect Albania’s imports.

“Our country imports energy resources like fuel and even electricity during certain parts of the year when rainfall is scarce. We also import raw materials for construction and processing industries, food, and other daily goods,” he said.

Inflation in Albania, he estimated, will return to levels seen after the war in Ukraine began.

“Albania and other import-dependent countries in the region, such as Kosovo, must act quickly to diversify their economic base. They should emphasize domestic production, prioritizing sectors with the fastest export potential,” Gjokutaj emphasized. He added that it’s important to analyze potential shortages in the European market or among other partners.

“On the other hand, financial support must be extended to weaker or more vulnerable economic sectors through subsidies and fiscal stimulus policies. This must be done to ease pressure on the budget, which will likely need to be revised or supplemented with a Plan B to cope with the worst-case scenario. We must prepare both a pessimistic scenario and a liberal one—because there is no room for optimism in this situation,” Gjokutaj concluded.