The introduction of 25% tariffs on European vehicle exports to the United States may cost 20% of Czech automotive exports, Zdenek Petzl, head of the Czech car producers’ association, AutoSAP, told CTK, the state news agency. He argued that the biggest hit would be on car parts producers, which export mostly to Germany. While there are almost no direct exports of Czech producers to the US, most of the car parts produced for Germany go to premium car makes, which are then exported to the US. If these tariffs are introduced, Czech automotive industry sales are expected to drop by CZK 12bn, while employment in the sector – by about 25,000 people.
The combined economic effect is estimated at only 0.1% of GDP, however, which is relatively optimistic. Indeed, if only 25,000 jobs are endangered, we don’t see the automotive sector suffering a lot, since it is already working at full capacity, according to anecdotal evidence. Given how fast labour costs have increased in the sector, a reduction in employment might actually be beneficial, while the direct effect on the unemployment rate shouldn’t be more than 0.3-0.4pps, according to our calculations.