It has been over three weeks since Donald Trump signed a decree on 25 percent tariffs on all imports of steel and aluminum to the USA. If they come into force as announced – on Wednesday, March 12 – it would be a hard blow to Swedish and European companies in the sector.
"As good as it goes"
Furthermore, on April 2, a decision is expected from the Trump administration on another round of USA tariffs on the EU and Sweden. It is unclear what goods will be affected. Trump has, however, warned of general tariffs, on "cars and all other things".
We clearly want to calm down and de-escalate the situation as good as it goes, says Sweden's Trade Minister Benjamin Dousa (M) about the situation.
In total, Swedish goods worth SEK 186.5 billion were exported to the USA last year, according to the Swedish Trade Council. This makes the USA Sweden's third-largest export market.
The EU's Trade Commissioner Maros Sefcovic had meetings in Washington with counterparts in the Trump administration last week to discuss the tariff threat. Extraordinary ministerial meetings have also been held in Brussels on the issue.
Prior to the tariffs that the Trump administration has already introduced against Canada, Mexico, and China, demands have been made for measures to curb the influx of fentanyl into the USA and stricter border controls.
When it comes to the EU, it is more unclear. The threat has instead been motivated by statements from Trump that the trade balance is unfair and that the EU was created to cheat the USA. He has also pointed out tariffs as a source of revenue to finance tax cuts in the USA.
We have not received any information about a list of demands from the USA, says Dousa.
New trade agreements
According to the Trade Minister, there are no winners in a trade war with higher tariffs, but he believes that American consumers will be the hardest hit. And so, all uncertainty and disruptions in value chains will affect corporate investments.
It will be inflationary, he adds, pointing out how the stock exchanges on Wall Street have reacted negatively to the development.
Dousa describes the EU's unity on the issue as broad. First, they want to try to calm down the atmosphere, but if USA tariffs are introduced, the EU will respond proportionally and simultaneously do everything to get new free trade agreements with other major countries in place quickly.
The US President Donald Trump's government has – despite attempts to meet demands for stricter border controls and measures against the fentanyl influx into the USA – introduced 25 percent tariffs on all imports from the USA's two largest trading partners: Canada and Mexico. The only exception is oil and gas from Canada, which gets a slightly lower tariff rate.
President Donald Trump has also doubled the tariff rate that has been in place since January on all Chinese goods – from 10 to 20 percent.
Canada and China have immediately responded with countermeasures, while Mexico's government has chosen to wait. Negotiations are still ongoing between the countries, which could lead to the tariffs being softened.
Trump signed a decree on 25 percent tariffs on all imports of steel and aluminum from March 12. Trump has also said that he plans some form of broader EU tariffs from April 2 and is preparing tariffs on copper.
Source: Bloomberg
The EU's average tariff rate against the USA is 2.43 percent.
The USA's import tariffs on goods from the EU average 2.37 percent, according to the Swedish Trade Council's calculations based on the situation in 2022.
Donald Trump has requested a report from the USTR unit at the US Department of Commerce by April 1 this year, based on which he said the USA will level out its tariffs on goods from other countries to the same levels as other countries use on goods from the USA.
Source: Swedish Trade Council
