Prague – Analysts predict that the EU’s trade agreement with the USA, which establishes a blanket tariff of fifteen percent, will slow the growth of the Czech economy by several tenths of a percentage point. However, they argue that the agreement’s role in reducing the risk of high sectoral tariffs—which have led to uncertainty and lowered investment in key European sectors—is more critical. Exporters indicate that the newly announced tariffs on EU goods represent the highest levels anticipated. Otto Daněk, Vice Chairman of the Exporters Association, informed ČTK that some Czech companies are already shifting production to the USA.
Coalition politicians view the agreement as the best possible outcome, emphasizing its contribution to stability and predictability. Deloitte analyst David Marek stated that the 15 percent tariff on EU goods exported to the USA could lower the Czech GDP by 0.3 to 0.4 percent, with engineering, electrical engineering and electronics, and the chemical and pharmaceutical sectors being the most impacted. Meanwhile, a relatively favorable adjustment comes from the reduced final tariff on automobiles, which is expected to lessen negative effects on major trading partners like Germany and Slovakia, noted Jaromír Šindel, an economist with the Czech Banking Association. Analysts agree that the agreement reduces the risk of high sectoral tariffs, alleviating uncertainty and encouraging investment in crucial European industries.
The trade agreement has helped the EU avoid a trade war, but certain sectors may still face significant repercussions, according to Lukáš Martin, director of the international relations section of the Czech Confederation of Industry and Transport. He remarked that, while the agreement fosters more predictable trade relations between the USA and the EU, it reduces potential impacts on businesses compared to a full trade conflict. Zdeňka Zajíčka, president of the Czech Chamber of Commerce, urged the Czech Republic to explore new business avenues beyond traditional markets, advocating for the diversification of trade ties to ensure long-term economic stability amidst geopolitical uncertainties and evolving global trade dynamics.
Ivo Červenka, director of the Association of Engineering Technology, expressed concerns that tariffs could significantly affect Czech manufacturers of machining and forming machines, particularly those exporting to Germany, which then sell to the USA. He warned that reduced German demand for Czech products could lead to decreases in domestic production.
The Czech automotive sector views the USA as a minor direct export market. In 2023, only 0.8 percent of domestic automotive exports, valued at 9.3 billion crowns, were directed to the USA, with finished vehicles not included. According to Zdeňka Petzl, executive director of the Automotive Industry Association, the consequences of the new agreement will mostly be indirect, notably through the export of components to Germany—comprised of 30 percent of exports—that remains a primary buyer of Czech production and a major exporter of finished vehicles to the USA. Petzl emphasized the need for the EU and the USA to commit to further eliminating trade barriers and enhancing strategic partnerships.
From an agricultural standpoint, the agreement is seen as an acceptable compromise and is not expected to significantly impact Czech agricultural exports. Nevertheless, farmers remain cautious due to uncertainties regarding which commodities will be affected and the specifics of the tariffs. Agricultural NGOs have highlighted the potential domino effect, noting that agriculture is linked to various other sectors. (July 28)
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