Approximately one million cars roll off Slovakia’s production lines each year, making this central European country with a population of 5.4 million the world’s largest carmaker per capita and, consequently, the most exposed in Europe to the tariffs on car imports imposed by US President Donald Trump.
The car industry drives 11% of Slovakia’s economy, which totaled €127 billion ($139 billion) in 2023. Exports account for over 90% of GDP, and car exports account for 30% of these overseas sales.
Slovakia exported cars worth €4.3 billion to the US in 2023, while billions more were earned from parts that were produced in Slovakia and installed in vehicles sent across the Atlantic from Germany and elsewhere.
Tariffs expected to bite quickly
This heavy dependence on the car industry and the swift implementation of the US auto tariffs last week mean that the fallout will be quickly felt in Slovakia, analysts predict.
“Small and open economies like Slovakia are likely to feel the effects fairly quickly,” Richard Grievson, deputy director of the Vienna Institute for International Economic Studies, told DW.
Jaguar Land Rover (JLR), one of the four carmakers that run factories in Slovakia, announced on April 7 that it has paused shipments to the US, which account for around one quarter of its global sales.
Peter Kazimir, head of the National Bank of Slovakia, branded the auto tariff a “European-American Armageddon” in a social media post and warned of slower growth, labor market jitters and rising prices as a result.
Why is Slovakia so dependent on the car industry?
The importance of the auto industry to Slovakia’s economy stems from the economic model developed by successive Slovakian governments — and indeed governments across central and eastern Europe — in the post-communist 1990s, which made the country a cut-price workshop, bolting machines together for foreign investors.
In addition to JLR, Volkswagen, Stellantis and Kia have located major plants in Slovakia. This has encouraged a large number of parts suppliers to produce there too. Together, these companies employ around 225,000 people — almost 10% of all jobs in the country.
Estimates vary, but it has been forecast that Trump’s tariffs could cut thousands of these jobs while economists at Erste Bank and KBC expect them to hit GDP for at least 1.5 percentage points by 2028, dealing a devastating blow to an already sluggish economy.
Slovakia’s PM under fire
Slovakia’s populist Prime Minister Robert Fico is, along with Hungary’s Prime Minister Viktor Orban, one of the most pro-Trump leaders in the EU. However, like others who have tried, he has found flattering the US president a fruitless endeavor.
Fico’s failure to earn a reprieve from the US president during a trip to Washington in February has earned him scorn from Slovakia’s opposition and threatens to worsen the political pressure he has been under in recent months.
“Robert Fico has completely missed the mark. For months, he’s been focusing on issues that are irrelevant for Slovakia, while ignoring the most important thing — the automotive industry, the backbone of our economy,” former Prime Minister Eduard Heger said following Fico’s return from a meeting with Elon Musk, where he discussed US funding of Slovak civil society.
Voters will bear the brunt of tariffs
The government’s response to Trump’s tariffs is unlikely to salve the concerns of Slovaks.
Economy Minister Denisa Sakova of Fico’s nominally left-leaning Smer party has sounded less than certain about how to deal with the issue.
“We still hope that the tariffs will be postponed somehow,” she told a press conference in late March. “If they are not postponed, we will have to deal with it somehow.”
It was the cost-of-living crisis following Russia’s invasion of Ukraine that helped Fico return to power in late 2023. The electorate remains highly vulnerable to economic conditions.
The tariffs are, therefore, clearly alarming for a governing coalition that has already been in crisis for months due to internal squabbling and massive protests from opponents concerned about Fico’s pro-Russian stance and authoritarian policies.
The three-parties in the government — Smer, its center-left splinter party Hlas, and the far-right Slovak National Party (SNS) — are already testing the faith of their voters with austerity measures provoked by empty state coffers.
And it will be these same voters who will bear the brunt of any job losses or falling incomes resulting from the tariffs.
“This threatens to deepen Slovakia’s economic problems and could spell big trouble for the government,” political scientist Tomas Koziak suggested to DW. “The coalition parties are already losing support. This will accelerate that trend and provoke further chaos in the coalition. Who knows how long it can survive,” he said.
Fico seeks to blame EU
This has the government nervously looking to shift the blame elsewhere. However, given Fico’s support for Trump, it has few targets left — with the exception of the EU.
Matu Sutaj Estok, interior minister and leader of Hlas, has accused Brussels of “moralizing” at the expense of “security and prosperity,” leaving the EU too weak to avert the tariff disaster.
The SNS has demanded the dismissal of Slovak EU Trade Commissioner Maros Sefcovic, a veteran Fico ally, for his “passivity,” despite the fact that such a move is outside the prime minister’s remit.
This suggests that Bratislava is unlikely to contribute much to the EU unity that Alberto Rizzi of the European Council on Foreign Affairs told DW is key as the bloc mulls its response to Trump’s tariffs.
Change in economic model needed
Analysts also suggest that these tariffs should also be used as an opportunity to push forward the long-neglected update of Slovakia’s economic model — an issue on which no Slovakian government has acted in the last three decades.
“All of Slovakia’s leaders, and especially Fico, have cheered and taken the credit as each car plant arrived over the years,” said Koziak. “The long-running warnings over the high concentration of autos in the economy have now come to pass.”
For his part, Fico — who has long used anti-EU sentiment to fuel domestic political support — has said he plans to meet with carmakers to ask them to suggest measures that he will pass on to the European Commission.
Edited by: Aingeal Flanagan
