EU trade agreement creates economic uncertainty for the Czech Republic

The EU's recent trade agreement with the USA, announced on July 28, 2025, comprises a blanket tariff of 15 percent on goods exported from the EU, which is expected to slow the growth of the Czech economy by several tenths of a percentage point. Analysts, including Deloitte’s David Marek, estimate that the GDP impact will range between 0.3 and 0.4 percent. Key sectors such as engineering, electrical engineering, and pharmaceuticals are predicted to be the most affected. The Czech automotive industry, while not significantly exporting directly to the USA, is indirectly impacted through its connections with German manufacturers, which export to the U.S. The trade agreement aims to mitigate the risk of more severe sectoral tariffs, thereby reducing uncertainty that has hampered investment activity within key European sectors. Coalition politicians have lauded the agreement as a maximum possible outcome, providing stability and predictability in trade relations amid a complex global economic landscape. While the agreement may introduce certain challenges, it also represents a strategy to avoid a trade war between the EU and the USA, which could have had more devastating effects on European economies. In addition to tariff considerations, the agreement has implications for the strategies of Czech exporters who may be forced to reconsider their production locations, as indicated by reports of Czech companies relocating production to the USA. The overall trade dynamics for the Czech Republic could shift as businesses seek to diversify trade ties and find new markets for their goods and services, especially in light of geopolitical uncertainties. From the perspective of Czech agriculture, the trade agreement is seen as an acceptable compromise that should not majorly affect agricultural exports. However, the overarching sentiment among industries is one of cautious optimism, coupled with concern regarding the possible drop in demand from Germany for Czech manufactured goods, which could result in decreased domestic production. The introduction of tariffs poses both risks and opportunities, making adaptability crucial for the future economic stability of the Czech Republic.