Skopje, 23 January 2025 (MIA) – If US President Donald Trump imposes tariffs for China and Europe, it’ll mean the start of a trade war because China and the European Union will respond by introducing similar measures, said Vienna Institute professor, economist Branimir Jovanovic.

It will likely raise the prices of import goods, reduce import and export, raise inflation and lower economic activity.

“To what extent, it will depend on how far things will go. In some mild scenario, models indicate that global growth would slow down to about 0.3 percent points, and in a worst-case scenario – a whole point. Since global GDP is close to 110 trillion dollars, it means the price of trade war would be somewhere between 350 and 1100 billion dollars a year,” Jovanovic says in a statement to MIA. 

As for Macedonia, the main effect would include lowered economic activity in the EU affecting Macedonian exports. In such case, Jovanovic says he expected economic growth to slow down, noting recession wouldn’t be expected. 

“Since the automotive industry could be hit first by the tariffs, and Macedonian exports in the EU to a large extent fall in this category, effects would be somewhat greater than global growth. Yet, I wouldn’t expect a recession. It is more likely that growth would slow down by 0.5-1.5 percentage point, i.e. – instead of GDP growing by 3% a year, it would grow 1.5-2.5%,” says the leading economist. 

Although Trump, he adds, has been announcing he will introduce tariffs for the EU and many other countries for a long time, from what he has done since taking office, it seems that he’ll use tariffs as means to fulfil other goals. 

“He will demand that the EU should buy more weapons, oil and gas from America all the while blackmailing the bloc by hitting it with tariffs if it failed to do so. Statements from European politicians so far suggest that most of them would comply, meaning they would go on bended knee before Trump, but it would most likely save the EU from tariff at least for a while. The question is how long it could last. I think not long because Trump will have new demands over and over again, which the people in Europe wouldn’t stand. It is only a matter of time when tariffs will be introduced for both the EU and China and for other countries,” Jovanovic tells MIA.  

MIA file photo