Sweden Faces Economic Challenges Amid Trump's Tariff Threats

In early 2026, Sweden is grappling with the economic and political ramifications of former President Donald Trump's recent threats to impose increased tariffs on imports from the European Union. Trump's announcement that tariffs could rise to 25% starting June 1 on certain goods has raised concerns across Swedish industries and economic circles.

The Swedish automotive sector, particularly manufacturers of vehicle components, finds itself in a precarious position. Peter Bryntesson, CEO of the industry organization FKG, described the situation as nearly impossible to manage if tariffs reach 10%, which Trump initially threatened to impose from February. Bryntesson stressed the importance of Sweden standing firm against these policies and suggested that Sweden should look to South America to diversify trade relations as an alternative to increasingly uncertain U.S. markets.

Economists in Sweden are closely analyzing the potential impacts on the national economy. SEB's chief economist Jens Magnusson noted that the intermittent tariff threats have become the "new normal" and questioned the reliability of U.S. trade commitments, emphasizing the damaging effect on trust. Despite these uncertainties, Magnusson projects that Sweden’s economic growth could still accelerate to between 2.5% and 3% in 2026, an increase from roughly 1.5% in 2025. However, he warned that the tariffs would likely temper any relief for Swedish households expected this year. Per Altenberg of Kommerskollegium highlighted the political fallout of the tariff threat, underscoring how raising tariffs breaks prior trade promises and strains trust in the U.S., while also pointing out the European Union's unified stance to protect its members.

From a governmental perspective, Prime Minister Ulf Kristersson called for patience and unity among EU countries, advocating a measured and coordinated response to avoid a trade war with the United States. While acknowledging the EU's arsenal of trade-related countermeasures, including the so-called "trade bazooka," Kristersson stressed that any revocation of the EU-U.S. trade agreement would require European Parliament approval and should be handled cautiously.

Meanwhile, Elisabeth Svantesson of the Moderate Party offered a somewhat reassuring view, stating that the Swedish economy can likely withstand tariffs in the 10-15% range, but she emphasized that the bigger issue lies in the broader consequences for international trade relations rather than the tariffs themselves.

These developments highlight Sweden's challenging balancing act between protecting its industries and households from tariff impacts while navigating complex geopolitical trade tensions. As the situation unfolds, Sweden’s response within the EU framework and its pursuit of diversified trade partnerships will be pivotal in managing the economic fallout.