As sweeping U.S. tariffs take effect today, Czech politicians, business leaders, and economists are warning of serious consequences for the country’s economy. The fallout has not only united domestic voices in rare agreement—it’s also reigniting debate over one of Czechia’s most divisive topics: adopting the euro.

Prime Minister Petr Fiala criticized the tariffs as “unfortunate and wrong,” warning that although direct impact on Czechia may be limited, the indirect effects could be very serious. The issue featured prominently at Tuesday’s cabinet meeting in Prague, where the government also reviewed the European Commission’s proposed retaliatory measures. These EU counter-tariffs are set to be implemented in three phases, beginning April 15.

According to Fiala, Europe has no choice but to react to the US measures. Meanwhile, Czech exporters gathered on the same day to discuss the implications for trade. Concerns center around rising costs and supply chain disruptions for Czech companies heavily reliant on transatlantic commerce. The close link between Germany and Czechia's economies could also spell bad news for the latter.

The timing of the tariff shock has also lent new urgency to discussions about Czechia’s long-delayed euro adoption. With economic volatility mounting and concerns about currency stability growing, some cabinet members see the situation as a call to act.  While ruling coalition memberssupport naming a national euro coordinator and outlining a roadmap for ERM II, internal disagreements and fears over economic sovereignty have repeatedly delayed action. A recent government report acknowledged both risks and benefits—warning that euro adoption would mean surrendering control over national interest rates and monetary policy. Fiala has previously stated that Czechia must first strengthen its public finances before considering euro adoption, stressing the need for significant internal reforms. In late November, the Government’s National Economic Council issued a private report evaluating the pros and cons of adopting the euro. The report cautioned that joining the eurozone would mean Czechia would lose control over its national interest rates and monetary policies, limiting its ability to address domestic economic issues.

Delivered by CzechTrade team Canada.
Source: Expats.cz.