The introduction of new US tariffs on imports from the European Union, announced by former President Donald Trump, is raising concern across Europe. But the Czech Republic may be among the countries hit the hardest. While the direct impact on households might appear limited, the indirect consequences for Czech industry, employment, and economic growth are significant and demand a clear strategic response both domestically and within the EU.
A Threat to Czech Industry
The recently announced tariffs — 20% on EU goods and 25% on imported automobiles — directly impact Czech exports, especially in manufacturing and the automotive sector. Tomáš Prouza, Vice President of the Chamber of Commerce, warned that these tariffs will reduce industrial profitability, limit investment capacity, and suppress wage growth. While direct exports to the US total around CZK 200 billion, indirect exports via EU supply chains are considerably higher, making the Czech economy particularly vulnerable.
Czech Subcontractors Under Pressure
As a country deeply integrated into European supply chains, the Czech Republic is at high risk. Many Czech subcontractors already operate on razor-thin margins. With the added cost burden, they will face downward price pressure from final manufacturers, potentially triggering a chain reaction of reduced profitability, investment slowdown, and job cuts.
Slower Economic Growth Ahead
Analysts now expect Czech economic growth to fall below 2% in 2025, a notable revision from previous forecasts. According to economist Dominik Rusinko, increased global protectionism will dampen international trade and erode business and consumer confidence — both of which are critical for the Czech export-driven economy.
Strategic Response: Diversify and Strengthen Economic Diplomacy
Experts stress the urgent need for diversifying export markets beyond the United States. Prouza calls for a major expansion of CzechTrade and a relaunch of Czech economic diplomacy. At the same time, the European Union must speed up the signing of new free trade agreements and use the opportunity to build a more competitive and integrated internal market.
Political Reaction: Balancing Caution and Firmness
Karel Havlíček, Vice Chairman of the ANO movement, advocates for a cautious and measured response — in line with the British approach — rather than retaliatory measures. However, others argue that the EU and Czech Republic should apply intelligent pressure on US financial actors and political influencers to avoid prolonged economic harm.
Czech Exports to the US: Sectors at Risk
In 2024, Czech exports to the United States rose by 18.8% year-on-year, reaching CZK 133.4 billion. The most affected sectors include machinery, transport equipment, pharmaceuticals, rubber products (especially tires), and vehicle components. The newly imposed tariffs will likely increase costs and reduce the competitiveness of Czech products in the US market.
Conclusion: A Strategic Crossroads for the Czech Republic
The impact of US tariffs on the Czech Republic cannot be underestimated. Key sectors, supply chains, and economic growth are at stake. The government must act swiftly to shield Czech businesses and workers by investing in economic diplomacy, expanding into alternative markets, and reducing regulatory burdens. With the right actions, this challenge could become an opportunity for deeper market reform and stronger global partnerships.
AI – generated image.
Sources: https://www.ceskenoviny.cz/zpravy/exporteri-cla-zasahnou-zejmena-subdodavatelsky-prumysl-hrozi-omezovani-vyroby/2656099, https://www.novinky.cz/clanek/ekonomika-vyvoz-z-cr-do-usa-loni-stoupl-asi-o-petinu-po-sedmi-letech-byl-vyssi-nez-dovoz-40515746
