Czech Blog: Tariffs Won’t Be Enough to Drive European Investors to U.S.  

Editor’s note: This is the first blog entry of the Global Atlanta Dispatch to the Czech Republic sponsored by the Czech Business Incubator Atlanta.

If I’ve come away with one thing from my Dispatch this week, it’s that many companies in the Czech Republic, especially those with highly technical products, are seriously looking at investing in the U.S. in the near future. 

Some projects are well along in the planning, with entities set up in Georgia and assembly-line equipment wrapped and awaiting shipping. Others are at earlier stages, decisions contingent on finding deals with customers they already serve in Europe. 

If and when these projects come to fruition, their timing might make it look a lot like the Trump administration’s coercive trade policies are driving these decisions, especially after the steel and aluminum tariff height to 50 percent. 

But, according to the execs I’ve interviewed, that conclusion would not just be incomplete, but naively wrong. 

Many of these projects, for starters, were already in the works before Trump took office, they said. Far from accelerating investment plans, the new levies have been at worst an obstruction and at the very least, a distraction. 

In other words, the old adage about businesses needing certainty still applies, particularly so with transatlantic investments where the terrain is unfamiliar and the risks are high. 

‘America First’ advocates have been right about a few things: that

But what they often don’t grasp is that European companies have their own shareholders and game plans, their personal imperatives for wanting to invest in the U.S.  And they’re sophisticated: They will not rely on a single myopic metric (tariff rates) to decide where to put a factory that could be around for 50-100 years. 

FDI can’t be simply transactional; it has to be a win-win proposition, an exercise of complementarity. Very few companies are going to move their mothership, their seat of intellectual property and competitive advantage, to a faraway land where they have few connections and little cultural knowledge. Instead, they will inevitably keep their Crown Jewels locked away in their castles, using outward expansion as a way to add more to their home coffers, hopefully benefiting the U.S. in the process.

Win-wins don’t always make sense in a zero-sum worldview, but of course, this is what U.S. companies do all the time — and we then praise them in the public sphere and reward them in the stock market for such shrewdness. Why should it be any different for foreign firms? 

It’s not that the Trump team is completely off base: Tariff income is up and trade deficits are down due to the trade war. The question is, at what cost, and how rapidly these on-paper changes trickle down to real life. One major company I spoke with noted that even if they made a decision tomorrow, site selection and plant construction would take at least a year and a half, followed by qualifying and commissioning that would put them close to the end of Mr. Trump’s first term and facing the prospect of a new administration. Best to make a 10-year plan and tweak the financial models with the tariffs du jour, one told me.

Lest you think I’m being too vague by not citing any companies, I’m purposefully speaking in riddles because I don’t want to steal my own thunder, as I’m poised to write more heavily reported stories about each of the five manufacturers I interviewed or later this week.

For now, suffice to say that when it comes to wooing investors from this Central European nation, the American argument has to be about more than tariffs.