Sweden feeling the heat from Trump tariffs — and there’s more to come

Sweden’s economy and households are feeling the heat from U.S. trade tariffs, the Scandinavian country’s finance minister told CNBC — before the full force of the levies has even come into play.

“Our economy and the public finance are very solid. We have a low debt and we can cope with quite a lot. But eight of 10 Swedes save or invest their money in funds, stock markets and so on. So when … the market has gone up and down, that has been costly for households,” Finance Minister Elisabeth Svantesson told CNBC Tuesday.

“[U.S. President Donald] Trump is really playing a high stakes here, and it’s a game with no winners, really, and it’s costly for households, and that makes me sad,” she added.

Uncertainty around the U.S.’ trade policy has left its mark on Swedish and international financial markets. Sweden’s central bank, the Riksbank, noted last week that the sharp shifts in U.S. trade and security policy were causing “substantial market movements during the spring and entail greater uncertainty than usual.”

Other signs have emerged that the threat of tariffs is affecting the wider Swedish economy, with government data released last week showing the economy shrank 0.2% in the three months to March, on a quarterly basis.

Sweden’s finance ministry revised its 2025 and 2026 growth forecasts downwards last month, predicting a 1.8% expansion this year and 2.3% next year, saying tariffs and uncertainty are dampening the country’s growth prospects.

“We don’t know whether tariffs will end, but the uncertainty and the unpredictability — that hurts our economy,” Svantesson told CNBC.

Market volatility is having a significant effect on savers in Sweden, a country renowned for its high level of household savings in investment funds among its 10.5 million population.

The nation has actively encouraged retail savings in capital markets for decades, enabling citizens to invest in shares and investment funds and making the practice far more commonplace than in other European countries, like the U.K.

Assessing the distribution and demographics of savers in Sweden, financial watchdog Finansinspektionen noted in March that savers on the younger and older ends of the spectrum tend to put their money into savings accounts. A larger portion of new savings for middle-aged Swedes is in shares and investment funds, ranging from pension schemes and fixed-income to sustainable and technology-focused funds.

Swedish households held liquid financial savings — assets in bank accounts, funds, shares or other savings that generate a cash return — totaling 268 billion Swedish kronor ($27.8 billion) in 2024, with 138 billion Swedish kronor ($14.3 billion) held in investment funds, Sweden’s statistics agency said in March, with the average Swede saving around 1,000 Swedish kronor every month in such funds last year.

At the end of the first quarter of 2025, the total fund assets in Swedish investment funds amounted to 7.75 trillion Swedish kronor, according to the latest data from Sweden’s statistics body.

“Eight out of every ten Swedes save in funds, and if mandatory premium pension savings are included, we are all fund savers,” the Swedish Investment Fund Association (Fondbolagens förening) — which aims to promote and protect confidence in funds as a savings format — says on its website, describing the country as a “world leader in fund saving.”

Trump’s announcement in April that he would impose import tariffs on a wide range of trading partners, friend and foe alike, has proven a major source of market and economic uncertainty, and it’s making some Swedish fund savers nervous, the association told CNBC.

“Swedish fund savers are used to equity investments going up and down in the short run and have a long investment horizon,” Fredrik Pettersson, chief analyst at Fondbolagens förening, told CNBC Wednesday.

“Having said that, in our statistics we can see that in the beginning of this year, until now, active fund savers have sold U.S. funds, and bought European and Swedish funds,” he noted.

Morten Lund, Scandinavia chief economist at JPMorgan, told CNBC on Wednesday that Trump tariffs are ” having a pretty clear impact on household sentiment” and that this could feed into the wider economy.

“So what we can see is that household confidence has moved around the U.S. election, from being the highest across the developed markets to now it’s actually plummeted to being the lowest. So it’s been a pretty significant shock, and I think it’s fair to say that this is very much related to tariffs uncertainty,” he said.

Low household confidence could filter through to consumption, Lund said, judging from the latest growth data.

“We do think that there will be a hit. We did get the first GDP numbers from the first quarter, they declined, and that was a clear disappointment, and based on where the confidence numbers are now, we should also see a pretty weak number here in the current quarter,” Lund noted.

Sweden is an export-dependent country: exports amounted to around 55% of the national gross domestic product (GDP) in 2024, according to the country’s central bank, making its wider economy vulnerable to tariffs imposed on the EU by President Trump.

The move — and tariffs on other trading partners — was predicated on what Trump sees as unfair trading practices by the bloc, which it denies, and persistent trade deficits that the U.S. runs with the EU.

Trump initially imposed 20% duties on the EU as part of his sweeping “reciprocal tariffs” announced in early April, before slashing the rate to 10% for 90 days on April 9 to give time for both sides to negotiate new trading terms.

The EU and U.S. have been locked in talks to try to reach a trade deal, but Trump said in late May that he was recommending a straight 50% duty on goods coming from the bloc amid stalling negotiations.

European Commission President Ursula von der Leyen managed to persuade the president to give talks more time but, as things stand, the EU has until July 9 to reach a deal with Washington.

Sweden’s largest exports to the U.S. are autos, machinery, pharmaceuticals, paper products and iron, steel — which is now subject to a 50% U.S. import tariff — and iron ore. Most Swedish exports go to other Nordic or European countries, but the U.S. is the third largest single exporting country, the Riksbank notes.

“Of course, we are very dependent on exports,” Sweden’s finance minister told CNBC’s “Europe early Edition.”

“With this uncertainty, companies are holding back, waiting for investments, because they don’t know what will happen. Will the tariff be 10 or 20%, or something else?” she asked.