Trump's proposed tariffs put Slovakia's auto industry at risk

The impact of U.S. President Donald Trump's proposed 25 percent tariff on imported cars and auto parts is raising concerns in Slovakia, a major European auto hub.

For more than three decades, Auto-Impex has been a trusted name in Slovakia's car business. But owner Peter Hron sees trouble ahead.

"It is a huge seismic shift that will go through the whole economy of Slovakia," Hron told CGTN.

Slovakia, known as the 'Detroit of Europe,' is a key auto exporter to the United States. The Volkswagen plant in Bratislava produces high-end models like the Porsche Cayenne, Audi Q7 and Land Rover Defender.

Industry leaders warn that thousands of jobs could be at stake.

"Our analysis showed that 20,000 jobs are in danger," said Alexander Matusek, president of the Slovak Automotive Industry Association. "But we hope we will find a solution. We hope that we can find a way to negotiate with the USA."

Sales of new cars have already slowed in Slovakia, according to Hron.

"People are currently feeling (like) not buying new vehicles when there is uncertainty in the air," Hron said. "At this point they are not sure if their livelihood is really guaranteed, and that's why they don't want to do like a long-term three-to-four-year commitment. So basically here in Slovakia we already experience over 25 percent drop in registrations."

The stakes are high for Slovakia, where the auto sector represents 44 percent of industrial output. Volkswagen Slovakia is the country's largest private company, employing more than 250,000 people.

Economists fear that a trade war with the U.S. could hugey disrupt the economy.

"If we go back to the economic crisis of 2008, this was probably the only year the auto industry production levels dropped," said economist Tamas Dudas. "Cars were not selling, so it eventually translated to a 5 percent GDP drop. So if something like this happens, it will translate to economic problems."

Hron says his company is adjusting to the uncertainty.

"The fact is that we are expanding our used car business….because people will need cars, but they will go for a lower entry price," Hron said. "We are also introducing new brands which are much more independent and more flexible."