US tariffs may hit Czechia the hardest in EU: Here's why

Czechia is expected to be among the hardest-hit European nations if the U.S. follows through with a proposed 25-percent tariff on EU imports, according to a report from international credit ratings agency S&P Global. 

The tariffs, pushed by American President Donald Trump, are likely to slow economic growth across Central Europe, despite the region's relatively limited direct trade exposure with the U.S.

Czechia will also face significant economic consequences due to its deep integration with the German automotive sector. For example, Czechia’s machinery and transport equipment exports to Germany account for more than 10 percent of total exports. According to Eurostat, exports represent 69 percent of the country's total economic output. 

Trump announced last week that his administration would soon impose tariffs on European goods, arguing that EU trade policies have harmed U.S. interests. The European Commission has vowed to respond "firmly and promptly" if such measures are enacted.

The Czech crown weakened sharply against the euro on Friday last week following Trump's announcement, while the Polish zloty also dipped from a 10-year high. Economist Nicholas Farr of Capital Economics told Reuters he estimated that the proposed tariffs could reduce GDP growth in Central Europe by an average of 0.5 percent—a greater impact than previously anticipated.

Beyond tariffs, analysts suggest broader economic risks for the region, including weakening demand for German automobiles in Czechia. This would also harm economies like Czechia's, which depend on Germany’s industrial health.

S&P says that, with inflation still elevated since Russia’s 2022 invasion of Ukraine and existing budgetary challenges, further economic disruption could worsen fiscal deficits in several Central European nations—including Czechia. 

While Poland’s large internal market and EU recovery funds may shield it from some of the tariff's impacts, smaller export-reliant economies like Czechia remain highly exposed. As the region braces for economic headwinds, policymakers in Prague and beyond are closely watching for further developments from Washington and Brussels.

There are other ways in which the potential tariffs could hurt Czechia. Last month, Chief Economist of finance company Natland Investment Group Petr Bartoň argued 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 would increase.

A U.S. tariff on Chinese goods could push Chinese exports to Europe, intensifying competition for Czech businesses. While consumers may benefit from lower prices, domestic textile and electronics producers could struggle, potentially leading to wage cuts or closures, the expert said.