^{Photo: Sveriges Radio}

Sweden’s Economy Rattled by Trump’s Tariff Gambit

Sweden, a country known for its economic resilience and high household savings, is now facing serious financial strain. The source? Escalating U.S. trade tariffs under President Donald Trump’s renewed policy agenda. Despite strong fundamentals like low national debt and sound public finances, the Swedish economy is showing signs of vulnerability amid growing global trade tensions.

According to Sweden’s Finance Minister Elisabeth Svantesson, the uncertainty generated by U.S. trade policies is already unsettling Swedish households—even before the full impact of new tariffs is felt. “Trump is playing a high-stakes game, and it’s costing ordinary people,” Svantesson said in a recent interview. “This unpredictability hurts everyone.”

Financial Market Turmoil Hits Swedish Households

Sweden has a population of 10.5 million, and roughly 80% of Swedes actively invest or save in funds and stock markets—one of the highest retail investment rates in Europe. However, recent market volatility triggered by unpredictable U.S. policy decisions has made this level of exposure a risk.

In Q1 2025 alone, Sweden’s economy contracted by 0.2%, and the finance ministry has revised growth forecasts down to 1.8% for 2025 and 2.3% for 2026, citing tariff pressures. That’s a notable adjustment from earlier projections.

Households held liquid savings of 268 billion SEK ($27.8 billion) as of early 2024, with 138 billion SEK ($14.3 billion) in investment funds, according to official data. The average Swede saves 1,000 SEK monthly in such funds. And as of Q1 2025, total fund assets stood at 7.75 trillion SEK, according to Sweden’s statistics bureau.

Investment Behavior Is Already Shifting

Fredrik Pettersson, Chief Analyst at the Swedish Investment Fund Association (Fondbolagens förening), confirmed the sentiment shift. “Since the start of the year, we’ve seen a notable pivot—active investors are moving money out of U.S. funds and into European and domestic Swedish funds.”

This behavioral change reflects a broader loss of trust in the predictability of American economic policy under the current administration. According to a March report from financial regulator Finansinspektionen, middle-aged Swedes—those most active in diversified investments—are becoming increasingly cautious.

Household Confidence at Historic Lows

Morten Lund, Chief Economist for Scandinavia at JPMorgan, warns the economic implications may deepen. “We’ve seen Sweden’s household confidence drop from one of the highest among developed markets to one of the lowest since the U.S. election,” he said. “This isn’t just a blip. It’s a shock wave.”

He added that the falling confidence is likely to reduce household consumption, a critical component of economic activity. “The Q1 GDP dip wasn’t a coincidence—it aligns with consumer unease. If confidence remains low, Q2 numbers may also disappoint.”

Exports at Risk Amid 50% Tariff Threats

Sweden’s economy is deeply tied to global trade. Exports make up about 55% of Sweden’s GDP, and while the majority go to European neighbors, the U.S. is Sweden’s third-largest single export destination.

The most affected sectors? Automobiles, machinery, pharmaceuticals, iron and steel, and paper products. Sweden now faces up to 50% tariffs on some of its iron and steel exports to the U.S., after Trump slashed earlier proposed duties from 20% to 10% temporarily in April—only to push for a full 50% again in May.

This has created paralysis among Swedish exporters. “Businesses don’t know if tomorrow’s tariff will be 10%, 20%, or 50%,” said Svantesson. “So they’re pausing investments, delaying hiring, and waiting for clarity.”

Uncertain Future for U.S.-EU Trade Talks

The European Union is still scrambling to reach a new trade agreement with Washington. European Commission President Ursula von der Leyen secured a temporary delay in the 50% tariff implementation, but the July 9 deadline is approaching fast. If no deal is reached, Sweden—like many of its EU counterparts—faces a steep economic cliff.

Meanwhile, President Trump maintains that the tariffs are necessary to balance what he considers unfair trade practices and persistent deficits with the EU. Sweden, a vocal advocate for free and fair trade, is caught in the crossfire.

Stability at Risk in a Global Storm

Sweden’s economic narrative has long been one of disciplined growth and citizen empowerment through savings. But as the Trump administration doubles down on protectionism, even the most stable economies are beginning to show cracks.

The concern isn’t just short-term. If tariffs expand or persist, Sweden’s long-term growth and the financial security of its citizens could be at serious risk. For a country built on open markets and global cooperation, the stakes have rarely been higher.