Tomorrow, Tuesday, November 3rd, Americans will head to the polls in the closely watched midterm elections. Ahead of this pivotal moment, Stockholm Chamber of Commerce today presents a new report quantifying the impact of Donald Trump's trade policies and the extensive tariffs announced last April on Swedish companies.
The figures, based on statistics from Statistics Sweden (SCB) and the Swedish National Agency for Trade (Kommerskollegium), show that Sweden's merchandise exports to the US decreased by a full 15 percent during the first year of the new tariffs. This corresponds to a loss of nearly SEK 29 billion.
The decline is also remarkably broad, with all ten of the largest Swedish product groups experiencing setbacks. The hardest hit have been vehicles and vehicle parts, which lost SEK 6.2 billion, closely followed by electronics, which plummeted by SEK 5.5 billion. Machines, life sciences and the basic industry, where steel tariffs have had a direct impact, also show significant declines.
SEK 29 billion in reduced exports is a significant loss in absolute terms, and the fact that all ten major product groups are declining demonstrates how widespread the downturn is. At the same time, trade with the US remains strong and the country constitutes an important partner for Swedish companies, says Joakim Wirén, Chief Economist at Stockholm Chamber of Commerce.
E-commerce companies forced to find crisis solutions
It is not only the heavy basic industry that is suffering in the wake of the trade war. The sharp decline in merchandise exports and the electronics segment also reflects a new and grim reality for Swedish e-commerce companies and consumer brands selling directly to American consumers and retailers.
As early as this summer, Ehandel.se reported on how billions are at stake for e-commerce companies exporting European premium goods across the Atlantic, while the EU has been frantically trying to pressure the US for tariff exemptions. For many growing Swedish brands, the increased tariff barriers have created acute margin problems and administrative headaches.
A clear example of how hard the tariffs hit Swedish e-commerce came as recently as October. We then reported that children's clothing giant Mini Rodini suffered a substantial tariff hit and million-dollar loss after sales declined sharply, partly due to soaring tariff costs in the US. To save the important North American business and manage tariffs and local taxes more effectively, the company was forced to raise millions in new equity and start a US subsidiary, Mini Rodini Inc.
Services relatively unaffected
The development where Swedish companies are forced to establish a local presence, own subsidiaries or move warehouses and operations to US soil to circumvent tariff barriers is fully in line with the changing trade patterns that Stockholm Chamber of Commerce points out in today's report.
At the same time as Swedish merchandise exports have fallen sharply, merchandise imports from the US to Sweden have increased by SEK 7 billion, or 9 percent, during the same period. Swedish service exports, which are not affected by goods tariffs and which account for just over half of total Swedish exports to the US, have remained at an unchanged level.