Donald Trump has just won the US elections by a landslide, likely to include the popular vote, to become the country’s 47th President. This alongside great Republican Party wins in the US Congress after years of solid preparations for winning this fight. Thus, President Trump and his administration will be able to wield truly tremendous legislative and executive power at least for the next four years. Here we seek to list just some effects that this is likely to have on Sweden, at least over the next four years and quite possibly also longer than that. Together, they may be seen as shocks to the Swedish system.
The Swedish Government was likely as surprised as most by the dominance of President Donald Trump and the Republican Party’s success at this week's US elections. However, it is also well known that the Government Offices for some weeks devoted a number of analysts and other officials to map out likely effects on Sweden in case of a Trump win. Most of these guesstimates naturally would have focussed on a possible Trump win and the challenges this would mean for Sweden, its immediate neighbours and allies - and for Ukraine and on European stability. No Swedish political party, or Swede for that matter, now wants to see an economic downturn because of increased US tariffs, let alone a real trade war inspired by the Trump administration which would negatively affect Sweden’s recovering economy.
Prime Minister Ulf Kristersson (M) has been open to the media about the importance of free trade to Sweden as a country dependent on international trade for its economy. This even if the Swedish economy has been improving lately, including with an investment of SEK 60 billion via the budget and with a Riksbank policy rate just substantially lowered by half a percent to just 2.75%. The Riksbank direction also on 7 November confirmed at least its intention announced last September to lower its rate again in December and again during the first half of 2025. However, at the same time the Riksbank cautiously has made clear that global developments and events, in particular including the US elections, may indeed have an impact on this plan.
Swedish business leaders have been quick to express open recognition of President Trump’s strong reelection by American voters. The Chairman of the Confederation of Swedish Enterprise (Sw. Svenskt Näringsliv), Jacob Wallenberg, already last Wednesday commented that Europe and the European Union have an important role to play to now find ways to develop and deepen relations with the US. This while, like Kristersson, underlining that the transatlantic link is fundamental both for Sweden and Europe for trade - and for its national security. Swedish industry is said to be among the the largest investors in the US, including with considerable production and development there and Wallenberg underlined the importance for Sweden as well as for the US economy to keep costs low on both sides of the Atlantic, while maintaining both American and European competitiveness.
The clear point made is that both sides would suffer were the US now to impose higher customs duties on Swedish and other European imports. This nervousness is of course a reaction to Donald Trump’s campaign statements that high US tariffs may well come to be introduced on goods from all over the world, including not just China, but also from Europe. The Trump presidential campaign has flagged the possibility of new import duties of 10-20% for industrial goods and on the automotive sector - both which could clearly be very harmful to Sweden. Some commentators say that this could lead to a decrease of up to 15% of Swedish exports to the US if actually enacted. So maintaining real goodwill by effective negotiations with Trump’s trade team is a clear priority.
The issue of EU competitiveness is a priority question for the Swedish Government, which put it on the EU agenda during Sweden’s EU Presidency. For Sweden, and the rest of the EU, the recent report by the former Italian PM Mario Draghi on the future of European competitiveness has come at the right time. The report looks at the challenges faced by industry and companies in the Single Market and its findings will contribute to the new Commission’s important work on a new plan for Europe’s global competitiveness. The report is on the agenda for debate at the ongoing informal meeting of heads of states or governments in Budapest which will conclude today. EU leaders are set to debate how to make the EU fit for the future and more autonomous, with now being an important moment to build more unity among the member states - and to contemplate Donald Trump’s election victory. Such threats to the strategic European project are back on the agenda as its leaders are again facing the stark question of its long-term global economic relevance. An added factor for the EU is that President Trump has said that he intends to reverse US environmental legislation, which seriously risks undermining European business competitiveness.
US foreign policy will certainly change to a greater focus on China and the Pacific and away from Europe. So Stockholm, Brussels and other EU capitals will together urgently need to invest real efforts in establishing close and effective relations with the White House, the new US trade team, the State Department and the US foreign service. Republican control of the Senate will mean that President Trump’s appointments of new US ambassadors should be confirmed by the US Senate in short order, so its overseas diplomatic representation is likely to change quite quickly - and fundamentally. Analysts foresee that the present US foreign policy staff will be replaced in a purge of US Government officials to facilitate substantial foreign policy changes. A hawkish former State Department official during Trump’s first term, Brian Hook, is said to likely be given the lead on “the transition of America’s diplomats”. Sweden, together with the EU, will have to work hard to be heard in Washington, a scenario which Stockholm should already have prepared for together with its business sector.
US senior analysts with congressional experience tell Mundus that “Trump comes to power with a full flush” and that he also by winning the popular vote now has truly - and unprecedented - free hands to implement his strategic plan of changing America. They stress that this constitutionally is his last term in office so he has no concern about his reelection, but is likely to move fast and furious already in 2025 on his big priority items. These include mass deportation of migrants in the US, higher tariffs (cf. above), tax cuts, and a veritable attack on the US administrative state.
Personalities will affect Trump’s new foreign policy and several candidates are mentioned as possible new Secretary of State or Defence Secretary. A real risk for the Swedish and European key policy of support to Ukraine would be if Richard Grenell, one of Trump’s closest foreign policy advisers, is appointed National Security Adviser, a key position which does not require confirmation by the Senate. Grenell served during Trump’s first presidential term as acting director of national intelligence and as US Ambassador to Germany. He is known for recently having argued for the setting up of “an autonomous zone” in eastern Ukraine and freezing Ukraine’s chance of joining NATO for 20 years. This to end the war, which President Zelensky and his government naturally finds unacceptable. This raises the spectre of Sweden and the quite fragile European coalition having to support the Ukrainian defence without any active US support, including at a time of German political disunity and weakness - this while President Putin just congratulated Trump on his great win.
Should the Trump administration actually pave the way for such a forced - and undoubtedly temporary - freezing of the war in Ukraine, maybe already in 2025, then also other European countries would be at risk in the relatively near future. A side effect would of course be that the personal relationship between President Trump and President Putin would be openly questioned and the NATO alliance severely weakened. For the Nordic and Baltic countries, definitely including Sweden, this would have to lead to even greater investments in any effective joint defence of northern Europe, of the sub-Arctic and Arctic regions, something which today really rests on additional and earmarked US military might. Should Commander in Chief Donald Trump not be ready and willing to order the US Marine Corps to cross the Atlantic to Norway and then cross Sweden by road to Finland to defend it and the Baltic states things there would look much grimmer indeed than today. NATO’s Secretary General Mark Rutte, who previously has worked well with Donald Trump, has this week quite elegantly spoken of positive cooperation, rather than of conflicts, with the Trump administration on common global challenges.
Russia on the other hand will now during the next four years be able to replenish its armed forces, intensify its hybrid warfare against European states and substantially increase the security risks faced by them, including for Sweden, which is just now beginning to rearm itself again. The risks for hybrid, or open, armed conflicts in Sweden’s neighbourhood has just increased considerably - at least for the next four long years.
There is also a clear risk that President Trump will be succeeded by another Republican president of similar ilk, potentially for another eight years, so high time for Europe to brace itself and to work constructively together to seek to contain and manage these new risks. This will require even greater unity within the Nordic-Baltic group and of Europe as such. Donald Trump is a transactional politician and a deal-maker constantly looking for big wins. The Swedish and wider European challenge is now to ensure key win-win situations with the United States - and soon. It will have to entail at least an open acceptance of “America first”, combined with more principled stands for the truly longer term.
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