Zeman previously voiced support for President Donald Trump's decision to move the U.S. Embassy in Israel from Tel Aviv to Jerusalem, which sparked outrage among Palestinians and across the Muslim world.
The move has caused widespread anger from Palestinian after Trump gave order in that direction few months ago.
Trump had already broken with decades of U.S. policy in December to announce Washington's recognition of Jerusalem as Israel's capital, drawing near-global condemnation and sparking days of unrest in the Palestinian territories.
Trump said ultimately he authorized the spending of $300,000-$400,000 on the project.
He initially called it "Embassy Town" but then said he might call it "Trump Town".
Mogherini, on the other hand, that while the EU general secretariat does not have veto power on any of its members, she nevertheless said that no member state is going to act against the European consensus on this subject.
View of the US Consulate in Jerusalem's Arnona neighborhood, February 24, 2018.
While previous U.S. presidents had run for election promising to move the embassy to Jerusalem, none ever pursued the relocation once in office.
"The embassy in Jerusalem has been promised for many, many years by presidents", Trump said.
The grand mufti of Jerusalem warned that there will be war if the United States moves its embassy to Jerusalem.
Trump said he had nearly signed off on a proposal to build a new $1 billion embassy but baulked when he considered the cost. "We might have to build dozens of embassies, and we would need new land ready or that goal".
Meanwhile, Merkel, who has endured a frayed relationship with Trump, did not nod or show any signs of approval as the president bragged, even as he at one point turned directly in her direction seeking approval for his frugalness and negotiating sills.
"We have a great site. And it will be somewhat temporary, but it could be for many years", he said.
"But that's the way government works", he said.
"They were going to spend a billion dollars and we're going to spend much less than half a million dollars", he added.