Sweden and EU Redraw Trade Routes Amid New US Tariffs

Today, the new tariffs on exports to the USA begin to apply. At the same time, Sweden and the EU are now breaking ground for new trade routes. The map for world trade is being redrawn, says Per Altenberg, chief economist at the agency Kommerskollegium.

» Published: August 07 2025 at 05:31

Sweden and EU Redraw Trade Routes Amid New US Tariffs
Photo: Matilde Campodonico/AP/TT

Share this article

One of the most important agreements that the EU now has on its table is the free trade agreement Mercosur (of the Spanish Mercado Común del Sur - Southern Common Market), a customs union consisting of Brazil, Argentina, Venezuela, Paraguay and Uruguay.

Mercosur is growing in importance in the wake of the agreement between the EU and the USA that was concluded on July 27 and resulted in 15-percent tariffs for goods imported from the EU to the USA, according to Per Altenberg.

Concern for agriculture

The trade agreement between the EU and the USA sparked scathing criticism, including from France's prime minister, who called the agreement "subservience" for the EU's part. Germany's federal chancellor has warned that the tariffs could mean "great damage" to the German economy. In this situation, the EU cannot afford to dismiss an agreement with such large countries as Brazil and Argentina, according to Per Altenberg.

From a geo-economic perspective, it would be shooting ourselves in the foot, he says.

The goal is to get the agreement into port in December this year. But it must first be approved by the EU Parliament and the member states. In countries such as France, Poland, and Italy, there is concern about how increased imports of agricultural products can affect the domestic agricultural sector.

The fear is that it will become an import of agricultural products that compete with European ones. But Europe is competitive enough in agricultural products, Per Altenberg believes.

More agreements in progress

In the EU's pipeline, there are now also agreements with India, Indonesia, Thailand, Malaysia, Australia, and the United Arab Emirates. Where are the red lines for which countries the EU enters into trade agreements with, considering democracy?

It is primarily up to politicians to take a stand. But there is a difference between an agreement that concerns civil trade, such as this, and one concerning defense equipment, says Per Altenberg.

No ongoing trade negotiations are taking place between the EU and China, even though there was an investment agreement that is now on ice. Nevertheless, the EU has agreements with other countries that are not democracies, such as Vietnam. India, which the EU plans to enter into an agreement with before the end of the year, is in turn the largest importer of Russian sea-borne oil and buys about 35 percent of its oil from Russia. At least until a few days ago, when Trump threatened to punish countries that buy Russian oil with trade tariffs of 100 percent. The Russian war chest has been largely financed by energy exports to countries such as India and China.

Of course, we want to avoid trade with Russia and ensure that the new free trade agreements do not facilitate a redirection of trade there, says Per Altenberg.

Ebba Blume/TT

Fact: Mercosur

TT

Mercosur is a South American customs union and a trade bloc that was founded in 1991 and aims to promote free trade and economic integration between member countries Argentina, Brazil, Paraguay, and Uruguay. Venezuela is also a member but is currently suspended.

Mercosur's goal is a common market with free movement of goods, services, capital, and people. Mercosur has negotiated a free trade agreement with the EU that can become one of the world's largest when it comes into force.

Sources: Foreign Policy Institute, National Board of Trade, EU Commission.

Loading related articles...

Tags

Author

TTT
By TTEnglish edition by Sweden Herald, adapted for local and international readers
Loading related posts...