Fiala, experts: American tariffs may slow down the Czech economy
Prague – The introduction of a thirty percent tariff on the export of European goods to the United States, announced by American President Donald Trump starting in August, will slow down the growth of the Czech economy according to Petr Fiala (ODS) and analysts. However, Fiala believes there is still room for an agreement that would benefit both Europe and the USA, although Europe must be prepared for a bad outcome. Fiala estimates the impact of tariffs on the domestic economy at several tenths of a percent of GDP, while analysts estimate it at about one percentage point. However, considering a potential retaliatory tariff from the European Union, the outlook remains uncertain.
If the announced tariffs were to take effect, the chief economist of Trinity Bank Lukáš Kovanda expects their negative impact on the economic growth of the Czech Republic to be 0.8 percentage points for the entire year. According to analyst Dominik Rusinek from ČSOB, we could be looking at a range from half to two percentage points. On the other hand, the costs of tariffs will also be borne by American consumers in the form of more expensive goods, noted analyst Tereza Krček from Reiffeisenbank.
She also reminded that there are already effective American tariffs of 25 percent on the export of European cars and auto parts to the USA and 50 percent on steel and aluminum. According to expert Petr Knap from EY, car manufacturers have so far mostly absorbed the impact of tariffs into prices, so the drop in demand in the USA has been relatively small, but this cannot continue in the long term and prices will increase, especially at levels of 25 to 30 percent. “This will lead to a decrease in demand and the quickest possible relocation of production of certain models for the USA to local factories or the activation of additional plants. This will mean a decrease in demand for supplies from Europe and the Czech Republic,” Knap noted.
Analysis by Quantic Financial Solutions among 9,000 Czech companies revealed that while the Czech automotive and chemical industries face increased risks due to tariffs imposed by the US government in 2025, engineering, construction, and consumer goods show resilience even with tariffs of 15 and 25 percent. “The results of the analysis show that the Czech economy has strong foundations, and sectors like engineering offer investors attractive opportunities even in uncertain times,” stated Viktor Jelínek, one of the authors of the analysis. (July 14)
