Donald Trump said that tariff is his favorite word in the dictionary. Every new round of his tariffs brings chaos. Two out of three months have passed since the 35 percent tariffs on goods from Bosnia and Herzegovina (BiH) were paused. One headache has been paused, but others may just begin.
BiH will not bear the direct consequences of United States (U.S.) sanctions, but it will bear indirect ones. The greatest burden will fall on the defense industry, which was previously subject to a 12 percent tariff rate, and now it will be 35%.
“They are not the main problem and are not of such a large scope, considering that only 1% of total exchange relates to the U.S.,” said earlier Ahmet Egrlic, president of the Foreign Trade Chamber of BiH.
In support of the claim that BiH will suffer indirect consequences is also the fact that domestic companies export the majority of their products to the European Union (EU) market, which then places them on the U.S. market.
Although it is too early to talk about the effects, it is certain that the economy of BiH will also feel problems, especially when we consider that BiH’s foreign trade exchange with EU countries amounts to about 70%, and there could be a decline due to a drop in demand.
The U.S. is an example of a country that has historically nurtured its economy with the highest tariffs in the world. It is the same this time, responding to the growing economies of China, Japan, or Germany. Retired university professor Aleksa Milojevic believes that in this way one era of neoliberalism is ending because now other, less developed countries will also begin to introduce their own tariff protections. That, he adds, is what BiH should do as well.
“BiH is, first of all, a duty-free zone. We don’t have tariffs, or our tariffs are minimal. But that is a problem. We must introduce tariffs so that our economy can withstand the competition of developed economies. The problem is that our government does not have a policy for its own investment and its own economic development. That is what Trump is doing now, that is what all countries are doing. Everywhere, governments are the drivers of development,” says Aleksa Milojevic, retired university professor.
However, our authorities have another plan. The Council of Ministers of BiH is expected to discuss more than 20 items on the agenda today. The fifth is particularly interesting because it refers to the temporary suspension of customs rates on the import of U.S. goods. While Professor Milojevic believes this could create new pressure on the BiH economy, economist Admir Cavalic holds the opposite view.
“I think it is a useful initiative that will yield a number of positive results, primarily in terms of geopolitical balancing of BiH in front of the U.S. and, on the other hand, enable citizens of BiH and businesspeople to get cheaper products from the U.S., for example, health products, some devices and the like,” says Cavalic.
