US tariffs: A rough road ahead for Slovakia’s car industry
CEE Economies Special Report , 3. Apr.
Donald Trump announced another expansion of tariffs on imported goods to the United States tonight. For Slovakia, one of the biggest threats is tariffs on automobiles, which make up the majority of imported goods. The significance of the automotive industry is crucial, as it accounts for about 11% of GDP and a tenth of total employment in the economy. The higher the tariffs, the higher the loss of value added. Slovakia has one of the highest share of domestic value added embedded in the US imports and final demand on their total value added in the region.
The introduced tariffs could directly affect the Slovak economy through lower exports and reexports from other countries to the U.S., leading to a reduction in production and employment in the automotive industry, as well as across the entire supply chain. The indirect impact is expected through lower economic performance of our trading partners, particularly Germany. We anticipate a cumulative negative impact on GDP of 1.5 percentage points spread over three years, with the largest impact in 2026. The announced expansion to include all goods subject to tariffs, along with expected reciprocal measures from the EU, could double this negative effect, depending on the scope and strictness of the measures.
A detailed look at the importance of the automotive industry in Slovakia and the potential impacts can be found in the attached PDF.
The introduced tariffs could directly affect the Slovak economy through lower exports and reexports from other countries to the U.S., leading to a reduction in production and employment in the automotive industry, as well as across the entire supply chain. The indirect impact is expected through lower economic performance of our trading partners, particularly Germany. We anticipate a cumulative negative impact on GDP of 1.5 percentage points spread over three years, with the largest impact in 2026. The announced expansion to include all goods subject to tariffs, along with expected reciprocal measures from the EU, could double this negative effect, depending on the scope and strictness of the measures.
A detailed look at the importance of the automotive industry in Slovakia and the potential impacts can be found in the attached PDF.