Swedish Economy Shows Stability Amid Rising US-EU Trade Tensions

As 2026 begins, Sweden's economy demonstrates notable resilience despite the growing tensions in US-EU trade relations, marked by US tariff threats and potential retaliatory measures from the European Union. Finance Minister Elisabeth Svantesson announced that Sweden enters the new year with increased economic stability. The government's December forecast, coupled with Statistics Sweden's GDP indicators, shows an upward trend and a stronger-than-expected end to 2025, signaling a recovery following years of sluggish growth.

However, Swedish exporters face significant challenges, particularly in trade with the United States. Tariffs imposed by the US since April 2024 have led to a 16% decline in Swedish exports to the US between April and November 2024 compared to the previous year. The strengthening of the Swedish krona against the US dollar further complicates the export landscape. Stefan Karlsson, chief economist at Exportkreditnämnden, noted that while the automotive sector—accounting for about 20% of Swedish exports to the US—has fared better than anticipated, the situation remains serious, especially with potential new tariffs dubbed "Grönlandstullarna" looming.

Jan-Olof Jacke, CEO of Svenskt Näringsliv, highlighted the economic risks, emphasizing that exports constitute around 50% of Sweden’s GDP, with the US as a critical market. He stressed the urgency for a unified EU response to the US tariff threats to mitigate further economic impact. The EU is reportedly considering collective retaliatory tariffs to counterbalance the US measures, pointing to a trade war scenario.

On the financial markets, Sebastian Hallenius, allocation chief at LF, remarked that Sweden stands out positively despite market volatility fueled by trade tensions. The stock market experienced an initial 2% dip, but shares of companies like Saab rose. Analysts anticipate a market rally as conditions evolve, with expectations for the banking sector, especially Swedbank's strong Baltic presence, to excel during the upcoming earnings season.

Economic experts like Klas Eklund urge steadfastness against US pressure, aligning with Svantesson's call for a firm EU stance to preserve Sweden's financial stability. The ongoing review by the US Supreme Court of the tariffs' legality adds uncertainty, underscoring the complex international trade environment Sweden must navigate.

In summary, while global economic uncertainty and trade conflicts pose substantive risks, Sweden's government remains cautiously optimistic about the country's economic outlook heading into 2026, backed by solid GDP growth indicators and market resilience amid looming trade disputes.