Why Hungary and Slovakia could suffer the most from Trump’s tariffs
U.S. President Donald Trump has imposed sweeping tariffs on European Union imports, including a 20% general tariff on goods and a 25% tariff specifically targeting automobiles. These measures, effective as of Thursday, are expected to have significant repercussions for the economies of Hungary and Slovakia, two countries deeply intertwined with the EU’s automotive supply chain.
Why Hungary and Slovakia are particularly vulnerable
Both Hungary and Slovakia are heavily reliant on the automotive industry, which forms a critical part of their export-driven economies. According to G7, in Hungary, 91% of automotive products were sold internationally in 2023, with Germany accounting for 26.3% of Hungarian exports and the U.S. only 2%. However, Germany itself is highly exposed to Trump’s tariffs due to its substantial auto exports, creating ripple effects throughout its supply chain that affect Hungary.
Slovakia, often referred to as the “Detroit of Europe,” produces more cars per capita than any other country globally.
With over 73% of its exports to the U.S. consisting of automobiles and parts, Slovakia is particularly vulnerable to the new tariffs. The automotive industry supports over 250,000 jobs in Slovakia, making it a cornerstone of the country’s economy.
Economic impact estimates
Analysts predict that Trump’s tariffs could lead to substantial GDP losses in Central Europe. Erste Group estimates a cumulative negative impact of up to 0.8 percentage points for Hungary and Slovakia’s GDPs over the next few years. Slovakia’s losses could be even steeper, with projections reaching as high as 1.5 percentage points due to its concentrated reliance on automotive exports.
The broader EU economy is also expected to suffer, with an estimated EUR 85 billion decline in exports to the U.S., hitting Germany, Hungary, and Slovakia hardest. Automotive exports alone could face combined tariffs of up to 45%, rendering European vehicles uncompetitive in American markets.
Orbán supports Trump but cannot be an exception
Hungary’s Prime Minister Viktor Orbán has openly supported Trump but faces limitations due to the EU’s unified trade policies. Despite Orbán’s assurances on social media about negotiating favourable deals with the U.S., Hungary cannot strike independent trade agreements outside EU frameworks. Meanwhile, Slovakia has expressed concern but remains constrained by limited options for immediate action.
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