A 'fatal' blow? How Trump's world tariffs would hurt Czechia's economy

Czechia's export-oriented economy and high manufacturing output mean that a 10-percent tariff would seriously harm the country's industries.

Thomas Smith

Written by Thomas Smith Published on 04.02.2025 10:44:00 (updated on 04.02.2025) Reading time: 2 minutes

U.S. President Donald Trump has threatened to impose a 10 percent tariff on EU goods, a move that could have significant repercussions for the Czech economy, particularly in exports, employment, and consumer prices. Tariffs on other major world economies, such as China and Canada, may also seriously hurt Czechia.

Chief Economist of Natland Investment Group Petr Bartoň argues that Trump’s tariffs indirectly raise energy costs in Europe, including Czechia. By pressuring the EU to buy more U.S. oil and gas—often sourced from Canada—prices will increase.

A separate U.S. tariff on Chinese goods could lead Chinese manufacturers to redirect their exports to Europe, increasing competition for Czech businesses.

While this influx of cheaper Chinese goods might benefit consumers, domestic producers—especially in textiles and electronics—could struggle to maintain competitive prices. This added pressure could force companies to reduce wages or even shut down, says Bartoň.

Other industries, such as electronics and industrial machinery manufacturing, could also suffer. With U.S. tariffs making Czech products less competitive in the American market, companies may see reduced profits, leading to job cuts and economic uncertainty.

"I think that a 10 percent flat-rate tariff would have a quite fatal impact on the EU and would have the potential to send the entire bloc into recession," former Finance Minister Miroslav Kalousek also told Czech Television earlier this week.

If the EU retaliates against U.S. tariffs with its own trade measures, prices on certain American products could rise in the Czech Republic. This could affect everyday goods such as laptops, smartphones, gaming consoles, and even food items like beef, peanut butter, and whiskey. American car brands would also become more expensive due to increased import costs.

Trade wars typically slow economic growth, disrupt supply chains, and increase consumer prices. In a worst-case scenario, continued escalation could weaken the Czech crown, making imports—such as fuel and electronics—more expensive.

Tariffs also influence currency markets. "Inflation will rise in the U.S. due to these tariffs, pushing the Federal Reserve to either raise interest rates or slow their decline," Bartoň explains. This will strengthen the U.S. dollar against both the euro and the Czech crown , which is more closely tied to the euro.

Consequently, the crown may slightly lose value against the euro, reflecting its vulnerability to global financial shifts.

Additionally, if the global economy slows due to ongoing trade disputes, demand for Czech exports could decline, resulting in lower investment and sluggish economic growth.

Did you like this article?

Would you like us to write your article? Explore the options