Boris Popović: Possible Trade Wars Will Lead to Reduced Competition and Increased Prices

While U.S. President Donald Trump is concerned about how to make America great again (as if it has become territorially and economically small in the meantime), his foreign policy moves are causing concern among entrepreneurs. Perhaps the greatest concern arises from announcements about the introduction of tariffs, as they will inevitably lead to a reduction in trade in the affected sectors, and depending on the responses from competitors, may also result in a decrease in the volume of global trade, reduced competition, and increased final prices of products and services. We asked Boris Popović, the director and one of the founders of Rijeka’s Alarm Automatika, what he thinks about Trump’s initial economic and political moves.

– President Trump is trying to protect American interests and rectify trade imbalances that he believes are detrimental to America. I would say that where America is in imbalance, it is probably not competitive in those industries, and those are lower value-added industries, but there is also the other side in industries where America is very competitive and where it dominates the global market, and those are internet-based industries where the highest added value is achieved, so it has a significant advantage there – Popović explained.

Popović assessed that Trump’s policy in this regard could have some more concrete motives. Namely, among the major supporters of Trump’s campaign were large AI and internet companies, so it is possible that this is an action aimed at protecting their interests, as these are companies that resist additional regulation, especially in the European Union. In any case, concern remains because the introduction of tariffs will have adverse consequences for the global economy. And for consumers.

– Personally, I think this is not good for global trade and for consumers around the world. Every additional levy is paid by consumers, and every action provokes a reaction that will further strain relations and increase costs for consumers. All of this will slow down global trade and the growth and development of the global economy. This is contrary to the proclaimed policy of free markets and the growth and development of global competitiveness – emphasized Popović.

American Partners Uncompetitive or Too Expensive

Trade wars that could follow the announcements about the introduction of tariffs will have serious consequences for all participants in the global market. Popović explained that the economy will simply slow down, as limiting the freedom of trade would lead to market closures and a reduction in the volume of trade of global players with the U.S. And this will also affect the final product, Popović assessed.

– This will lead to reduced competition in the market and increased prices – said Popović.

American partners with whom Alarm Automatika has collaborated are, however, not competitive enough even now, although their products are still completely free from tariffs. Popović believes they have not adapted sufficiently and have not implemented new technologies into their products to a sufficient degree.

– Or they are too expensive. When I look at the history of the electronic security industry, EU manufacturers were dominant at the beginning, then American ones, then it shifted to Japan, and then Korean and Taiwanese manufacturers took the leading role in the industry, and in the last ten years, Chinese manufacturers have taken the lead. Now it is moving towards Vietnam and India – said Boris Popović.

Fortunately, Popović’s Alarm Automatika, which deals with automated security systems, has little reason to worry about the rapid and short-term consequences of the announced U.S. introduction of tariffs, as it is not significantly exposed to the U.S. In Alarm Automatika’s revenues, the European share dominates, and their key suppliers are from the EU, followed by China and the U.S. As he emphasized, in their selection, they were guided not by the country of origin of the components but by quality, modern technology, partnerships, and finally by commercial conditions.