SERBIA IN THE NEW WORLD ORDER: HOW TO HANDLE AMERICAN TARIFFS

Abstract

This paper focuses on the reciprocal tariffs imposed by the US administration and their strategic consequences for small, open, and non-aligned countries, such as Serbia. After a year, they are replaced with new 15% across-the-board tariffs, but the underlying US trade policy remained the same. In it, geopolitics shapes the world trade order, while military expenditures drive industrial policy. The following topics matter to Serbia in handling American tariffs: changes on the geopolitical map of the world, the gravitational economic power of the main trade blocs (USA and USMCA, China and BRICS, EU), the effect of their relations on third countries (Serbia), economic sanctions in the form of reciprocal US tariffs (including secondary tariffs), the arms race and its impact on reindustrialization, the impact of proxy wars on military expenditures and trade, and Serbia’s position in the global supply chains (especially rare minerals). Due to the American tariffs, Serbia’s position as a non-aligned country is not sustainable anymore. The methodology applied in this paper combines an analysis of geopolitical factors modelling the new world trade order with a classical econometric analysis of the elasticity of trade with respect to income and prices.