S P Global Ratings: Proposed U.S. Tariffs on EU Imports Threaten Central European Growth

S&P Global Ratings stated that U.S. President Donald Trump's proposal to impose 25% tariffs on imports from the European Union is likely to negatively impact growth prospects in Central Europe, exacerbating existing fiscal challenges. While the region's direct trade exposure to the U.S. is limited, the German car sector's vulnerability could transmit the shock to Czechia, Hungary, Slovakia, Slovenia, and Romania, where machinery and transport equipment exports to Germany constitute a significant portion of total exports. Capital Economics estimates the tariffs could curb Central European GDP growth by an average of 0.5%. S&P Global also noted that a decline in Chinese demand for German cars could have a more substantial impact on the region's growth than U.S. tariffs. Weaker growth could compound fiscal challenges in countries like Hungary, Poland, Slovakia, and Romania, already facing disciplinary procedures or grappling with large deficits.