U.S. lifts tariffs on Serbia: from 35% to 0%

The American administration has lifted tariffs on goods from Serbia that reached as high as 35 percent — the measure ceased to apply "precisely at midnight on the night between Friday and Saturday" and the rate is now 0 percent, announced President Aleksandar Vučić.

Economic implications and reactions

The decision covers key products that until now were burdened with high duties, including steel, aluminum, passenger vehicles and copper. Government officials and business owners say the removal could lead to a significant inflow of foreign investment and to an improvement in Serbia's investment and credit rating.

In explaining the move, President Vučić said: "We had tariffs on steel, aluminum, passenger vehicles, copper, which are strategic products, and what the Americans have always done, and then tariffs were added as a response to countries that had a foreign-trade surplus with the U.S. People should know that this caused us problems, especially with some foreign and domestic companies. Partizan from Užice used to export to them. In the future it will be 10 and 12 percent, but for now it will be 0 percent. This gives us a huge opportunity. This will mean further strengthening of our investment rating, the level of our credit rating. This will mean for us, I would say, a huge opportunity, when people compare where to invest their money, to know that they can invest in our country and that it is simpler for them" Vučić added, saying that this opens many other prospects, and that countries like Switzerland, Israel and others have tariffs of 12 percent."

Nebojša Atanacković, honorary president of the Serbian Employers' Union, assessed the U.S. move as extremely favorable: "The removal of the tariffs is not only an economic measure, but a message to investors that Serbia is a safe country for investment, and also something that will mean a lot for our country on the international level. I must admit that I did not expect U.S. President Donald Trump to make such a big turnaround regarding Serbia, and it is certain that he stands behind this, because he does not allow his administration to make such big decisions without his consent. Our tariffs are now zero, while other countries in Europe received increases to 10 or 12.5 percent! If tomorrow they reduce us to those 10 or 12.5 percent like the rest of Europe or Japan — that would still mean they see us as a friendly country. This is a big signal for investors, who had withdrawn because of the tariffs. Improving political relations with the richest country in the world inevitably improves our credit rating. This means cheaper financing for the state, but also for our companies. A larger inflow of foreign investment directly leads to the creation of new jobs and wage growth," said Atanacković, adding that positioning Serbia as an American partner contributes to long-term economic stability.

Atanacković also pointed to examples of companies that would have easier access to the U.S. market: "Let us not forget that Serbia recently opened a Strategic Dialogue with America and the very fact that they accepted it already means a lot for us internationally. I expect that the removal of the tariffs will most help Chinese companies operating in Serbia, such as SZ Linlong or the Bor complex, for which imports to America until now were practically impossible or drastically difficult. Also, President Vučić said that for the first time he is optimistic about the NIS deal and the agreement between Serbia, Hungary and Russia, but let us not forget that the key player here is America. We cannot expect the Americans to impose sanctions on the Russians around the world and lift them only in Serbia, but I hope we are now close to a good solution!"

Analysts of foreign and strategic policy point out that such a move by the U.S. is a strong signal. Darko Obradović assessed: "Clear strategic signals are now coming from America to Serbia as they once came to Tito's Yugoslavia. I think Serbia should actively approach this in order to transform these signals into materialization with a clear strategic framework that takes into account today's geopolitical realities in which the U.S. is the only reliable partner after the European Union! It is especially pleasing that we did not fall under the criterion of forced/enslaved labor, given that Chinese corporations operate in Serbia and are under constant scrutiny" Obradović believes.

Branimir Gjokić, an analyst of foreign policy, described the move as a gesture of goodwill: "This is a gesture of goodwill that in no way burdens or endangers America, but it is the first gesture after the start of the strategic dialogue between the U.S. and Serbia, with which the Americans want to show that they are ready for further talks and deepening cooperation. I believe that something will be asked of us from the energy sector, and the question for Serbia is whether it will be ready to give that — Gjokić said."

Government representatives, including Finance Minister Siniša Mali, welcomed the decision as a positive signal for deepening economic relations with the U.S. In the coming weeks it will be crucial how Serbia uses the privileges to increase export activity and foreign direct investment.

Photo: press material from the event