US President Donald Trump's plan to impose 25 per cent tariffs on European Union imports could dent Central Europe's growth, particularly through the German automotive sector, S&P Global Ratings told Reuters. While direct trade exposure to the US is limited, Czechia, Hungary, Slovakia, Slovenia, and Romania are at risk due to their heavy reliance on machinery and transport equipment exports to Germany, which account for over 10 per cent of their total exports. Slovakia and Czechia, where exports make up 92 per cent and 69 per cent of GDP, respectively, are among the most vulnerable. Poland, Central Europe's largest economy, is seen as less exposed due to a lower dependence on car exports and strong domestic demand. However, regional currencies, including Hungary's forint and the Czech crown, weakened following Trump's tariff announcement. S&P Global said the tariffs could shave around 0.5 per cent off Central Europe's GDP growth, compounding fiscal challenges in the region, where countries like Hungary, Poland, and Slovakia are already under EU scrutiny for excessive deficits. Despite the tariff risks, S&P noted that falling Chinese demand for German cars could have an even greater impact on Central European economies, with China accounting for a third of Volkswagen, Mercedes, and BMW sales, compared to 10-15 per cent for the US. Attribution: Reuters Subediting: Y.Yasser
