There is a shadow hanging over the Europe. The ascent of Donald Trump to the White House has exposed brewing fragilities within the continent’s economy and military prowess. That hasn’t been evident anywhere more than in Germany, the industrial powerhouse reeling from two years of negative growth.

Now, Germany’s allies, who have lived in their own shadow of Europe’s biggest economy, are left facing questions about their own survival. That’s most evident in its neighbor to the east: the Czech Republic.

Within the giant $348 billion Volkswagen group lies Skoda, a quiet success story for the Czech Republic that says as much about the country’s post-Cold War ascension as it does about its long-term risks. 

The Czech Republic, also known as Czechia, has built its post-Cold War economy in the same way Germany did post-reunification: with a focus on industry. Manufacturing as a share of GDP has hovered above 20% in the country for the last 30 years, joining Germany in bucking the Western trend of deindustrialization.

A third of Czechia’s exports go to Germany, while 20% of its imports come from its closest neighbor.

The ties between the Czech Republic and Germany are best exemplified by Skoda, the Czech Republic’s largest company, which is owned by Germany’s largest company, Volkswagen.

Skoda’s strength

Skoda makes up a significant chunk of the massive Volkswagen group, which also contains Audi, Seat, Porsche, and the Volkswagen brand itself.

The carmaker raked in €26.5 billion in revenues in 2023, a massive 26% increase on 2022, and equivalent to nearly 10% of the Czechian economy. 

If it were an independent company, Skoda would rank in the top 150 of the Fortune 500 Europe, as one of the top 10 carmakers, and by far the largest Czech company on the list.

The automaker also hasn’t faltered in recent years like its fellow automakers under the Volkswagen umbrella. In the first nine months of 2024, Skoda increased operating profits by nearly 35% compared with the same period in 2023, while the Volkswagen group as a whole faced a 10% decline in profits.

The group’s profit margin in the first nine months of 2024 of 8.3% also puts it among the most profitable brands across Volkswagen and well above the collective group margin of 5.6%.

Skoda is, according to David Havrlant, chief economist for the Czech Republic at ING, the “golden egg” within the Volkswagen group, he told Fortune.

The carmaker’s sales are overwhelmingly Europe-focused. Around nine in 10 of its cars were delivered to Europe in 2023, with the remainder going to Asia-Pacific. That appears to have shielded the manufacturer from the fall-off in sales experienced by Volkswagen, which built its dominance on China’s burgeoning consumer market, which has gone into reverse in recent years.

Indeed, through 2024 Skoda increased its deliveries by 6.9%, compared to the Volkswagen brand’s 1.4% decline, reflective of a nearly 10% reduction in China deliveries last year.

That divergence from Volkswagen speaks more broadly to a divergence between Czechia and Germany.

The Czech Republic, alongside Germany, struggled through 2024, with GDP declining 0.3% in the wake of sanctions on Russian energy. 

Yet the country is expected to rebound faster than its partner to the West, with growth projections of 2.3% in 2025, almost triple Germany’s projected growth of 0.8%, according to International Monetary Fund (IMF) forecasts.

The Czech economy has proved more attractive for businesses looking to expand their footprint. Wages in the country, for example, are around half what they are in Germany, lowering input costs.

Its wider population seems more content too.

“I would say that the Czech consumer is less depressed than the German consumer,” Ana Boata, head of economic research at Allianz Trade, told Fortune.

Domestic demand is expected to be a big driver of Czech GDP growth this year, reflective of that higher consumer confidence.

But seemingly unshakeable bonds between Czechia and Germany continue to threaten the country’s economy.

Czechia’s obstacles

Czechia’s manufacturing output has moved in lockstep with Germany’s since the latter’s downturn began in 2022. Both countries’ PMIs have been in contraction territory for nearly three years as manufacturers battle with higher energy costs and falling demand, causing knock-on effects to producers downstream.

Ladislav Tyll, a lecturer at the Prague University of Economics and Business, notes that between manufacturers and companies in the supply chain, the automotive sector in Czechia accounts for around half a million jobs.

“So frankly speaking, if anything goes wrong… they are out of business, and this country could technically financially collapse,” Tyll told Fortune.

Both countries have been struggling with falling investment, creating a barrier to future growth.

“That’s really not good for those economies, and that doesn’t signal anything good for the coming years,” said Tyll.

One of Chezia’s primary concerns for its manufacturing-heavy economy is oppressive climate targets. The country joined Italy last November in calling for a relaxation of the EU’s climate rules that will lead to the banning of the sale of carbon-emitting vehicles by 2035.

Allianz’s Boata says 2025 is a year of transition for carmakers and the economies they occupy. On the one hand, they will need to up their production of electric and hybrid vehicles to comply with environmental regulations. On the other, this means wading into much more competitive markets beset by cheap Chinese-made competitors. 

“That will also imply some impact on the turnovers of those Czech suppliers that are basically interlinked with the German car makers, not only volume, but also price,” says Boata.

ING’s Havrlant writes extensively about the Czech economy. He says that there are four stages of structural crisis a country must pass through before policymakers can step in.

“You have to recognize there is a problem. Second, you have to admit it is your problem. Third, you have to force yourself to get across that you want to do something about it. And fourth, you do something about it.” 

The Czech Republic is somewhere before stage three and four when it comes to its automotive sector, Havrlant says, while he thinks Germany is stuck at point zero.  

As a result, Havrlant believes the Czech economy is slowly decoupling itself from Germany. 

“Their order books have been bad for such a long time that until now, it was always enough to wait until things got better, but that’s not the case anymore,” Havrlant said of Czechia and Germany’s relationship.

Political headwinds

The political story in Czechia is also the same as in Germany and, increasingly, across the rest of Europe. 

Like in Germany, elections beckon in 2025, and there is a similarly populist tone to polling in both countries. 

Between Alternative for Deutschland (AfD) in Germany, National Rally in France, Brothers of Italy in Italy, and Reform in the U.K., Europe’s biggest economies have been rocked by surging support for far-right political parties ready to upset the status quo. 

So follows the similarly jingoistic Patriots for Europe, the insurgent Cezchian populist party set to sweep elections later in 2025.

Tyll says the potential victory of Patriots for Europe would likely have a positive impact.

Instead, it’s Germany’s February elections that pose more of a risk for Czechia’s economy. 

He worries that the rising influence of the far-right AfD could cause Volkswagen to target job cuts outside of Germany, with Skoda’s tens of thousands of employees a potential target.

The country will hope Germany recognizes the importance of its “golden egg” and the deeper partnership that looks like it’s serving Czechia more than its ally.

Editor’s note: A version of this article first appeared on Fortune.com on January 21, 2025.

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When I talk about how employee trust boosts business performance, audiences often nod in agreement. Companies do better when their people trust them. That makes sense to most people.

But then comes the question: “Can trust be measured indollars and cents?”

Let’s look at the 2025 Fortune 100 Best Companies to Work For, using a common business metric: revenue per employee (RPE), which reflects the productivity and efficiency of a company’s workforce.

On average, the 100 Best Companies earn 8.5 times more revenue per employee than the U.S public market RPE. This astounding outperformance includes both public and private companies, with public companies reporting RPE that’s more than 9.4 times higher than market RPE, while private companies see more than 7.7 times higher. This financial advantage trends across industries, reinforcing the financial benefits of high-trust workplaces.

RPE success must be measured in tandem with the employee experience. The 100 Best Companies don’t hit high RPE numbers by slashing headcount and overworking their teams. Well-being isn’t sacrificed for productivity. Quite the opposite. They outperform their peers in every employee experience metric from retention and well-being to innovation and productivity, with 90% of people describing their workplace as caring.

The 100 Best Companies also more than triple their stock market performance. 

More nodding from the audience. That’s what they want: Financial returns that light up Excel reports. High stock prices and skyrocketing profitability. A workplace brimming with innovation and agility, and record levels of productivity and efficiency.

Their next question: “How?”

I love this question, but not everyone loves my answer: It’s all about leadership behaviors, not just benefits. Trust isn’t built through more PTO. It’s in how leaders make people feel and the actions they take.

The 100 Best Companies have built a foundation of employee trust that fuels performance in all areas of their business—not just some areas, and not just for some people. They are more profitable and productive because they’ve created consistently positive work experiences, lower burnout rates, and higher levels of psychological and emotional health compared to typical workplaces.

Employees at these companies give extra in droves and are extremely agile, fueling high RPE levels. That doesn’t happen by giving them perks like free food or Apple watches. If it were that simple, every workplace would be great. It happens by listening to people and involving them in decisions that affect them. These leaders ensure all employees have opportunities for special recognition and make sure they believe that what they do matters; that they matter as human beings first and workers second. They’ve built organizations where transparency, well-being, and high levels of cooperation are cornerstones.

That is how business is done: with people, not to people. When that happens, the business benefits all stakeholders—from frontline workers to executives, shareholders to local communities. 

The 100 Best exemplify how high-trust cultures drive business success: Leaders shape the employee experience, which in turn shapes the culture, and that culture drives business performance.

Great leaders understand that it is because of their people that they outperform. It’s why they work on the nine high-trust leadership behaviors, so their people want to show up for them, work hard, and innovate when given a chance. They listen, evolve, and meet the moment.

In an age of distrust, AI fears, geopolitical uncertainty, and record-low employee engagement levels, that moment is now.

Agility and extra effort drive productivity

The 100 Best are more productive than their competitors, thanks to high levels of agility and discretionary effort, which boost their impressive RPE numbers.

Employees don’t give extra because they’re told to work harder or adapt faster. They go the extra mile because they work in cultures of collaboration, special recognition, and purposeful work.

At the Best Workplaces, 84% of employees say they can count on people to cooperate. Why does that matter so much? Because the likelihood of extra effort skyrockets by a jaw-dropping 720% when employees work in a cooperative workplace. And when employees feel everyone has opportunities for special recognition and their work is meaningful, they are 60% and 50% more likely to give extra, respectively, according to an analysis of 1.3 million employee surveys from Great Place To Work.

Leaders make sure people feel a sense of purpose in their work, which can boost stock performance. They build cultures of camaraderie and cooperation through training and modeling leadership behaviors.

Accenture, for example, intentionally builds and tracks cooperation through its “Leader Network Diagnostic tool” and accompanying workshop, which helps break down silos and expand and strengthen connections among colleagues.

Synchrony’s President and CEO Brian Doubles redefined leadership by incorporating high-trust leadership behaviors into the company’s values and strengthening its culture of cooperation. Over the past three years, these efforts have led to Synchrony’s stock price doubling and voluntary turnover hitting an all-time low. Its ranking on the 100 Best has jumped from No. 44 in 2020 to No. 2 in 2025.

Not only do employees at winning companies give more effort, they’re able to quickly adapt to changes because they’re well-informed, understand their impact on the business, and feel empowered to voice their opinions.

But it’s when organizations celebrate new and better ways of doing things, regardless of the outcome, that agility soars—by 250%, according to 1.3 million survey responses.

For that to happen, you must have psychologically safe workplaces for people to speak up, as Harvard professor and bestselling author Amy Edmondson shared. Eighty-one percent of people at the 100 Best describe their company as psychologically and emotionally healthy compared with 56% at typical companies. When employees can try new things without fear, innovation thrives, as does financial success. Companies that excel in “Innovation By All” experience 550% faster revenue growth.

Listening to and empowering employees to innovate has led to business success at Credit Acceptance, where leaders hold themselves accountable for acting on employee feedback. The company publishes a report on how many questions have been asked year-to-date, the number of up and down votes, and the status of those on which they have committed to “take action.” 

Agility is also 50% more likely when employees believe their leaders have a clear strategic vision, and 40% more likely when they are actively involved in decisions that affect them. It’s why leaders at Hilcorp Energy give employees access to the same financial information they have. They hold monthly meetings to keep everyone informed and involved in discussions about the company’s financials, breaking down details so employees learn how their contributions are linked to the company’s success.

Every leader today can create a culture that fuels business performance, no matter the company size, industry, or budget. The building blocks of employee trust are the same.

Focus on leadership—at all levels and for everyone. When you do, your business will be more profitable, productive, efficient, innovative, and resilient.

Michael C. Bush is CEO of Great Place To Work and coauthor of “A Great Place to Work For All.” Follow him on LinkedIn.

Do you have what it takes to make a Best Workplace list? Find out.

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• President Trump is set to unveil potentially the biggest hike in U.S. import duties since the Smoot-Hawley Tariff Act nearly a century ago, and reports suggest staffers are still jockeying for the chance to change his mind up until the final moment.

President Donald Trump and his economic team had not yet decided on the size and shape of his “Liberation Day” tariff plan 24 hours before it was set to be revealed in a Rose Garden ceremony at the White House at 4 p.m. on Wednesday, according to reports.

Bloomberg cited anonymous sources in the administration as saying Trump was undecided whether to impose a simple, easy-to-understand flat tariff (of 20%, for example). The alternative is to opt for a more targeted approach where hikes are tailored to hurt more protectionist trading partners, such as the European Union, the most. 

The arrival of broad punitive tariffs—expected to take effect within 24 hours of their announcement—could force companies to scramble to redirect cargo already en route to the United States.  

Speaking to reporters on Tuesday, White House press secretary Karoline Leavitt said Trump was “with his trade and tariff team right now perfecting it to make sure this is a perfect deal for the American people and the American worker.”

Foreign leaders continued to attempt to influence Trump’s plan and carve out exceptions for their countries as the Wednesday deadline approached. 

On Tuesday, Israeli Prime Minister Benjamin Netanyahu unilaterally dropped all duties levied against U.S. goods.

This came without the previous negotiation of a free trade agreement, meaning all World Trade Organization members are now within their rights to sue Israel under the organization’s bylaws in order to win similar treatment.

The White House did not respond to Fortune’s request for comment by press time.

‘2025 tariffs could be so much more devastating than Smoot-Hawley’

Trump’s late tweaks to any tariff announcements speak to the complexity of rewriting long-existing trade relations and uprooting entire supply chains.

Financial markets have not been able to predict the likely effects on gross domestic product, inflation, or asset prices.

On Sunday, Goldman Sachs hiked its probability for a U.S. recession from 20% to 35%, as planned investments are postponed and the economy risks grinding to a halt.

Investors sent gold to a new all-time high above $3,000 an ounce on Tuesday, fueling fears about what the changes will mean for U.S. stock and currency markets.

Spencer Hakimian, founder of New York macro hedge fund Tolou Capital, also warned that tariffs could backfire worse than the punitive duties that deepened the Great Depression.

“The economic damage from the 2025 tariffs could be so much more devastating than Smoot-Hawley,” he wrote. “The economy is five times more exposed to tariffs today than it was 100 years ago when we learned our lesson.”

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