Trump’s Tariffs Create Uncertainty for European Tech – Export Economist Warns: ”Undoubtedly negative”

As the global economy braces for the ripple effects of renewed U.S. protectionism, Stefan Karlsson, Chief Economist at Sweden’s Export Credit Agency (EKN), warns that President Donald Trump’s tariffs are already casting a shadow over economic growth — with Sweden and the broader EU expected to feel the strain well into 2025.

While the most extreme initiatives have been paused for 90 days, several tariffs remain in place. “All of this will impact growth through the rest of 2025,” Karlsson said. 

The International Monetary Fund’s global forecast, originally pegged at 3%, is expected to be revised downward. For the EU, already facing sluggish 1% growth, even a small hit could significantly dampen momentum.

“What we’re seeing now is undoubtedly negative for the global economy,” said Karlsson. “There are too many unknowns in the equation. The uncertainty alone is enough to make companies and investors hesitate.”

A New Kind of Crisis

Unlike the 2008 financial crisis or the COVID-19 pandemic, which saw governments working together to stabilize markets, the current trade tensions are driven by deliberate policy shifts from the United States. Karlsson likens the situation more to the 1930s depression: “This time, it’s not the system breaking — it’s the system being challenged. The U.S. is actively working against the global order it helped create.”

For tech companies — particularly service-based startups and scaleups — the impact may not be immediate.

“Trump’s tariffs target manufacturing, not services,” Karlsson noted. “So a SaaS company selling to other service companies might avoid direct effects. But if your client is in manufacturing, you’ll still feel the pressure indirectly.”

Tech Investment on Hold

One of the most pressing concerns for the Nordic tech ecosystem is the investment climate. “We’re seeing companies of all sizes holding off on investment decisions,” said Karlsson. The temporary 90-day pause in tariffs offers a slight reprieve, “but it’s no guarantee.”

This investment hesitation is particularly problematic for startups and scaleups, which rely heavily on venture capital to grow. “The same caution applies to VC firms. They’re reluctant to deploy capital in an unpredictable trade environment,” Karlsson added.

Navigating Geopolitical Uncertainty

For smaller tech companies not yet operating globally, the economist advises caution. “Now is not the time to take on heavy fixed costs. Companies with strong financial fundamentals are usually the ones that weather uncertainty best.”

However, those looking to enter the U.S. market may find opportunities — especially if they are willing to localize.

“Some of what Trump wants is for foreign firms to move production to the U.S. That could, paradoxically, make things easier for companies willing to establish operations there,” Karlsson noted. 

For companies already operating in the U.S., Karlsson said some may be able to pass added costs onto consumers, while others may ramp up local production — something companies like Volvo are already considering.

What Can Entrepreneurs Do?

Karlsson believes that while the EU’s trade policy is handled at a supranational level, member states must stay vigilant. “We’re not at a point yet where Sweden needs to inject emergency financial support, but we can’t rule out that this may become necessary in the future.”

His advice to entrepreneurs: stay informed. “If I were a business owner today, I’d want to be extremely clear on what applies to my industry — tariffs, regulations, all of it. Kommerskollegium is a good source of information, and EKN can also support export-related issues. Governmental tools already exist.”

With the global trade order in flux, Sweden’s tech sector — like many across Europe — is bracing for a period of turbulence. As Karlsson concluded, “We don’t yet know how this will land. But if the uncertainty lingers, growth will suffer.”