How Trump-proof is Sweden’s economy?

When US President Trump threatened tariffs on Sweden, Finance Minister Elisabeth Svantesson insisted the Swedish economy was “Trump-proof.” The threat was later dropped, but given the volatility of global trade politics, the question remains: how resilient is Sweden to a renewed tariff shock?

What’s behind the “Trump-proof” claim?

Sweden’s public finances are a major source of confidence. Government debt stood at about 34.5 percent of GDP in 2025 and is projected to be around 38.6 percent in 2028, even with higher defense spending and expansionary fiscal policy. That compares favorably with many peers: roughly 62–64 percent in Germany, about 113 percent in France, and around 101 percent in the UK. Low public debt gives Sweden room to cushion a downturn with targeted support and investment if global trade tensions escalate.

Inflation also looks manageable. Price growth was 2.1 percent in December, broadly in line with the Riksbank’s 2 percent target. A planned halving of VAT on food from April is expected to pull inflation below target, giving the central bank flexibility to keep rates steady or even cut if needed. This policy space is a key buffer against external shocks.

However, there are vulnerabilities. Swedish households carry high debts, with private borrowing around 83 percent of GDP. That leaves consumers sensitive to interest rates and income shocks, potentially amplifying any downturn triggered by trade frictions.

Business sentiment: resilient but wary

From the perspective of major business groups, the recent tariff threat was serious and unsettling. Still, the broader assessment of the economy’s underlying strength is positive. Business leaders argue that Sweden is better positioned than many countries to navigate a rough patch, thanks to sound public finances, competitive export industries, and a track record of adapting to global shifts.

What economists are forecasting

Forecasters at Sweden’s major banks see a solid 2026 on the horizon—assuming no trade war. As the global recovery lifts demand for Swedish exports, and with lower rates plus an expansionary budget supporting households and companies, growth is expected to accelerate.

• Nordea: around 3.0 percent GDP growth in 2026 (up from 1.9 percent in 2025)
• Swedbank: approximately 2.6 percent in 2026
• Handelsbanken: roughly 2.9 percent in 2026

These projections hinge on a stable global backdrop. If tariff tensions reignite and widen into an EU–US trade conflict, the outlook would change quickly. Economists warn that Sweden—an open, export-dependent economy—could be “hit hard” by higher import costs, disrupted supply chains, and weaker demand. The worst-case scenario is a bout of stagflation: slower growth alongside higher inflation, driven by costlier imports and uncertainty curbing investment.

Analysts also note the broader geopolitical dimension. If trade disputes spill into security tensions, assumptions underpinning today’s forecasts would no longer hold. In that environment, banks would revisit their projections entirely.

Is Sweden truly “Trump-proof”?

There are two truths to hold simultaneously:

• Sweden has enviable buffers. Low public debt, credible monetary policy, and a history of pragmatic economic management give it capacity to stabilize the economy during turbulence. If tariffs dent confidence or trade volumes, the government can respond with fiscal support, and the Riksbank has room to adjust policy as inflation eases.
• Exposure to global trade is real. Sweden’s growth model leans heavily on exports and integrated supply chains. A serious trade confrontation between the US and EU would weigh on Swedish manufacturing, investment, and jobs—while higher import prices could lift inflation, narrowing the central bank’s room for maneuver.

The bottom line

Sweden is better positioned than many advanced economies to absorb a tariff shock. Strong public finances, moderating inflation, and policy flexibility make the “Trump-proof” label understandable—up to a point. But no open economy is immune to a full-blown trade war. In such a scenario, growth would slow, inflation could be pushed up by import costs, and households’ high debt could magnify the pain.

For now, the base case remains constructive: steady or easing interest rates, supportive fiscal policy, and stronger global demand should lift growth through 2026. The risk case, however, is clear—and would depend less on Sweden’s fundamentals and more on the trajectory of transatlantic politics.