Europe: What Trump 2.0 means for Central and Eastern Europe

CEE economies are among the most exposed to the impact of Trump policies due to their large, export-oriented manufacturing sectors and sovereign currencies. We assume EU autos and base metals will be hit by US tariffs – both feature prominently in CEE countries, while the US market makes up an above-average share of CEE exports.

What you will learn:

• Small direct US trade exposure obscures the impact. CEE manufacturers, particularly automotive, are integrated in the EU’s complex supply chains – so tariffs hitting German producers will also impact CEE. US tariffs will spark stiffer competition from China too.
• The near-term impacts of Trump 2.0 will be mostly on the region’s currencies and asset prices. CEE currencies have depreciated since the election, and we expect them to remain weaker relative to pre-election forecasts.
• What’s more, the scope and scale of the new US administration’s trade policies aren’t yet clear. A full-blown trade war with blanket tariffs would deal a severe blow to headline growth and trade flows, with CEE economies among the worst hit.