Sweden Responds to New US Tariffs with Shift in Trade Strategies
Sweden shifts trade strategies in response to new US tariffs, seeking new agreements amidst economic challenges.
Key Points
- • New 15% US tariffs on EU goods begin today, impacting Swedish exports.
- • Sweden and EU are prioritizing the Mercosur trade agreement with South America.
- • Sweden's economic growth forecast is reduced to 0.7%, with rising unemployment projections.
- • Concerns linger about agricultural imports disrupting EU local farmers.
On August 7, 2025, new 15% tariffs imposed by the United States on European Union goods officially come into effect, prompting Sweden to reevaluate and adjust its trade strategies. With these tariffs affecting Swedish exports significantly, domestic economic forecasts are paint a bleak picture, with growth expected to slow to just 0.7% this year, according to Konjunkturinstitutet (KI), while unemployment rates may rise to between 6.6% and 6.9% nationally, and even higher in certain regions.
In response to the tariffs, Sweden, alongside the EU, is actively seeking new trade agreements and partnerships. A major focus is the Mercosur trade agreement, which aims to enhance trade relations with South American countries including Brazil, Argentina, Paraguay, and Uruguay. "The landscape of global trade is being redrawn," noted Per Altenberg, chief economist at Kommerskollegium, indicating the urgency for Sweden to secure new markets to offset the impacts of the US tariffs.
Sweden's need for new agreements is underscored by the economic challenges stemming from the tariffs, which have increased the cost of Swedish goods in the US market. The economic outlook is further complicated by rising unemployment rates in municipalities, especially in northeastern Skåne, where rates are forecasted to exceed national averages.
Additionally, concerns have been raised about the potential impact of increased agricultural imports on EU farmers as part of the Mercosur agreement. While there are worries about undercutting local agricultural products, Altenberg reassured that Europe remains competitive in the sector. The EU plans to finalize the Mercosur agreement by December 2023, but it requires approval from the EU parliament and member states.
The economic challenges are not solely attributed to tariffs; the ongoing repercussions of the COVID-19 pandemic and geopolitical tensions, particularly due to the Ukraine invasion, have also played significant roles. The weakening economic growth in the EU compared to the US creates additional hurdles for Sweden, which relies on robust export channels to stimulate its economy.
In light of these developments, Swedish and EU leaders are urged to focus on creating more favorable conditions for businesses and exports to navigate the economic landscape effectively. The road ahead is fraught with challenges, but the pursuit of new trade agreements offers a potential pathway for economic resilience.