US Tariffs and the Resilience of the Swedish Economy and Logistics Real Estate Market
// Nordic Insight - Genesta’s editorial platform for independent perspectives on real estate.
KEY INSIGHTS:
• Sweden proves resilient — but resilience is deeply uneven across sectors and regions.
• Gothenburg carries the highest risk exposure, while Stockholm may become an unexpected winner.
• Central locations offering agility through access to major multi-modal transit intersections.
• Automotive slows, pharmaceuticals are protected and defence quietly accelerate.
• Tariffs are no longer just an economic issue — they are a location issue.
Trade policy rarely stays at the border. When tariffs shift, supply chains respond — and over time, so does real estate. The recent US tariff developments offer a live test of resilience: which Swedish industries hold their ground, which logistics hubs feel it first — and where new opportunities may quietly emerge.
Over 2025, global markets have proved agile in their response to the US imposing tariffs on imports amid an already volatile geopolitical backdrop. As an export led economy with established trading to the US, Sweden’s economy is directly exposed with potential implications for segments of the industrial and logistics sector. This article considers the impact of tariffs on exports by industry, explores their potential impact on the industrial and logistics market by hub, as well as mitigations to their effect. More broadly, it highlights the importance of policy risk to real estate investment strategies.
The Uncertainty of US Tariffs
US tariff rates have proved to be quite dynamic since enacted on ‘Liberation Day’ with the EU negotiating a trade deal in August. For the EU, tariffs broadly comprise three tiers including steel and aluminium at 50%, most other sectors at 15%, and a number of sectors including scarce natural resources, aeronautical products and, generic pharmaceuticals and their chemical ingredients are subject to low or no tariffs[1]. However, there is a lack of clarity as to the rates that apply to some goods across sectors as the agreed framework established is subject to further development.
Importantly, car manufacturing and components are included within the 15% band, reducing the rate from the 27.5% announced in April, but elevated relative to the previous prevailing 2.5% rate. At the time of writing, the EU and US are involved in further negotiations. Early stage soundings suggest that the US is seeking to make any lowering of steel and metals tariffs contingent on the EU softening tech regulation, which the EU has rejected.
Tariffs are a relative proposition as well as an absolute one. Policy changes can be somewhat capricious, with Canada broadly subject to a 25% rate which was due to rise by a further 10% in response to an anti-tariff advertisement on Canadian television, although this is yet to be enacted. The US and China engaged in a tariff battle, with tariffs on Chinese goods peaking at 135% in April, reducing to 47.5% by November.
These relative tariffs matter in a global economy. For European car manufacturers, the location of North American production plants is pivotal. For example, Volkswagen’s production facilities for US sales are in Mexico, Stellantis manufactures in Canada and Mexico, while Volvo AB’s trucks are entirely manufactured in the US[2]. Currently there is a 10% difference in the levy on European (15%) compared to Canadian and Mexican (25%) car manufacturing imports. However tariff rates and spreads between them across trading areas have been dynamic. This heightened uncertainty makes it very difficult for businesses to plan, particularly with regards to the large, fixed investments required to establish production plants and associated supply chain logistics.
The impact of tariffs on growth varies across countries. It is dependent on the contribution of goods to total exports, exports to the economy and the share of exports accounted for directly by the US, as well as indirectly through other valuable export market destinations. The type of exports goods traded is important beyond determining the tariff rate. The degree to which products are substitutable will influence the manufacturer's capacity to pass through tariff costs to the end consumer against the need to absorb part of the cost to shore up demand. It is widely considered that the US consumer will bear the greatest cost of tariffs through price inflation and spill-over effects that weaken the economy. However, tariffs will reduce demand for imported goods.
Sweden’s Export Economy and US Tariffs
Exports contribute around 45% of Sweden’s GDP, with goods accounting for approximately 62% of exports in 2024[3]. Of these the majority are high value goods, with pharmaceuticals, steel and other metals, car manufacturing and machinery accounting for approximately 70% of total exports (Figure 1).
Source: Genesta (2025), Statistics Sweden (2025)
As its third largest export market in 2024, Sweden has a relatively large direct exposure to the US (Figure 2). This is extenuated by a similarly large exposure to Germany, which exported around 10% of its goods to the US in 2024, making the US its largest export market on an individual country basis. Broader competitive weaknesses stemming from structural issues in costs, productivity and lack of investment in the German economy leave it more vulnerable to shifts in global demand – including from the impact of tariffs. The malaise of the German economy is of greater consequence to direct demand than that of US tariffs on indirect demand from Germany for Swedish exports. However, a proportion of Sweden’s exports to Germany are a component of the global industry supply chain.
Source: Genesta (2025), Statistics Sweden (2025)
Indeed, Figure 3 compares the structure of Sweden’s exports to each market by type of good. Relative to the breakdown of all exports, trade with the US in the twelve months to August is more strongly weighted towards automotive, industrial and other types of machinery, pharmaceutical and other chemicals, and to a lesser extent steel and other metals. Exports to Germany have a similarly large focus on pharmaceuticals, chemicals and industrial equipment, steel and metals. Other exports of machinery and appliances are lower. Although the automotive exports are a lower share relative to the US, they are significant and form part of the automotive component supply chain.
Source: Genesta (2025), Statistics Sweden (2025)
It is difficult to assess the impact of tariffs on the Swedish economy for a number of reasons. First, data at an industry sector level is available to the end of August, 2025 with the prevailing tariff agreement negotiated at that time. Second, there is evidence of accelerated purchase activity and hoarding in the first quarter as customers and importers sought to avoid tariffs costs anticipated in Q2. Third, the tariff environment has been dynamic and uncertain over 2025, with purchasing activity in Q2 and Q3 dampened by forward purchases in Q1 as well as anticipation of the outcome of US/ EU trade negotiations. However, to date the impact of tariffs on the Swedish economy has been less than
initially feared[4]. In part this is due to the no or low tariffs on pharmaceuticals and chemicals and the lowering of the initial proposed tariff on the automative industry and wider manufactured goods sectors.
Analysis by the Riksbank derived from a 2019 OECD study suggests that the value of direct Swedish goods and service exports to the US is 2.2% of value add, with a further 1% through third countries of which Ireland, Denmark and Germany are prominent[5]. The Riksbank estimates that at end 2024, US exports had increased to 4% of GDP. However, exports in the key industrial sectors of pharmaceuticals, vehicle manufacturing and machinery sectors account for 22% of the value add of US exports. As a result, the impact of tariffs as they stand is expected to be relatively limited, potentially shaving GDP by 0.1 to 0.3 percentage points[6]. At this level it is unlikely to have spill-over effects on private consumption. However, policy uncertainty remains a major risk and could dampen investment.
Although the impact on GDP may be relatively marginal, its impact on specific industries and companies may be considerably larger. Figure 4 shows the change in exports by industry from September 2024 to August 2025. This precedes the implementation of tariffs post trade negotiations and shows the impact of higher tariffs on key Swedish export sectors. Pharmaceuticals, automative and machinery experienced sharp declines. In contrast, office equipment and machinery together with electrical equipment experienced strong growth, potentially gaining a boost from more punitive tariffs in China and other jurisdictions.
Source: Genesta (2025), Statistics Sweden (2025)
Given the removal of tariffs, US pharmaceutical exports might be expected to rebound, although the weakening of the dollar also impacts pricing. The 15% tariff on non-sensitive goods represents a reduction from the initial 25% tariff, and a lower rate than other competing territories, but the impact on pricing is likely to continue to lower demand. Swedish companies that have already invested in the United States and already have operations there can more easily move some of their manufacturing from Sweden to the USA. For example, Volvo cars AB has announced it will introduce assembly at its plant in Charleston to help negate tariffs[7]. Although accelerated by tariff developments, this forms part of a wider restructuring of the business, with the company seeking to respond to deglobalisation and tailor its vehicle manufacturing to meet variations in consumer demand across regions.
Direction of trade and the Swedish industrial and logistics sector
Sweden’s industrial and logistics sector, excluding manufacturing plants, comprises 15.1 million square metres of distribution warehousing and logistics space, of which approximately 55% is considered high quality, modern stock (Figure 5). This space forms the distribution network for supply chains for import, export and domestic goods. Broadly, it may be split into a direction of travel comprising raw materials and components being distributed from suppliers to producers, and products being distributed from producers to customers. It may also be split into domestic and international demand, with foreign trade being two-way in terms of imports and exports.
Source: Genesta (2025), C&W (2025) Logistics Sweden, June
Trade barriers don’t just slow exports — they reshape demand for space, reroute supply chains and redefine which locations are resilient.
The impact of tariffs on individual industries and supply chains may have further implications for the structure of the industrial and logistics sector. Although the impact of tariffs on GDP may be modest, the impact on the volume of goods exports is more significant. Moreover, as it impacts specific sectors and companies it may also be more localised geographically.
The impact of tariffs and other trade barriers on demand for space is complex. In the short-term, tariff uncertainty may delay investment in new and existing export facilities and at the same time, slowing export demand may increase demand for warehousing to accommodate inventory and build-up of stock. In the UK, trade barriers created by Brexit slowed supply chain logistics leading to increased warehousing space demand. At the same time, investors should scrutinise the strength and resilience of tenants’ underlying business operations.
Should protectionist trade barriers prove protracted, supply chains may reconfigure as industries seek to replace and expand sales in new markets. For investors, land constrained locations offering excellent interregional port access and hubs offering multi-modal transport options and agility in respect of the direction of inter-regional trade afford risk protection.
In order to consider the exposure of different industrial and logistics hubs to changing US trading policy, the stock is broken down by both geographic region and the function of stock within the distribution supply chain network in Sweden. These have been identified as operations at ports, airports, regional, national and urban logistics.
Using proxy data on goods volumes from port authorities and road freight, it is possible to estimate the share of space involved in the distribution of imports/ domestic goods distribution and exports (Figure 6). With the exception of urban logistics which is dominated by e commerce and similar third party delivery to end customers, all other types of hubs are reasonably balanced between the inward and outward supply chain network.
Source: Genesta (2025)
As the type of warehousing and logistics facilities required vary across the supply chain, hubs and locations will evolve to specialise in serving a role within it. There are obvious geographical considerations with logistics in Southern Sweden acting as a gateway to Europe, while the port of Gothenburg has the capacity to handle inter-regional containment shipping. Equally, hubs may develop to serve the specialist needs of particular types of industry. For example, Helsingborg has developed specialist facilities for imported perishable foods, while temperature controlled facilities for shorter-dated pharmaceutical products are focused at Arlanda, close to production.
Focusing on the export supply chains of industries and businesses that are expected to experience demand decline for US exports enables identification of the industrial and location hubs that may have greater exposure to a weakening of tenant demand as investment decisions are delayed. Equally, industrial hubs that may benefit from a potential increase in short-term demand for warehousing can be identified.
As Sweden’s industrial capital, home of manufacturing and Sweden’s largest inter-regional port, Gothenburg is the market most exposed to the impact of US tariffs. Although Volvo’s restructuring and near shoring of US and Asian production facilities is not solely a response to US tariffs, it will have a significant impact. The US market accounts for 15.5% of total automative industry exports in 2024 and in the twelve months to August 2025 this decreased by 30%. However, the Gothenburg market is more export oriented and it is relatively supply constrained, especially in port adjacent locations (Figure 7). The overall vacancy rate for the Gothenburg market is 6%, and 5% for prime assets in strong locations.
Source Genesta (2025)
In the Stockholm region uncertainty may delay investment decisions and slow take-up by the pharmaceutical and high tech manufacturing sectors potentially pro-longing higher vacancy rates, which in turn might slow speculative supply. However, if tariff policy stabilises confidence will return and the sector may even benefit from its relatively competitive tariff rate relative to other regions and stemming from that, near shoring of production facilities – particularly from Asia – seeking to reconfigure supply chains to tariffs.
The impact of structurally lower car exports may be balanced by growth in other manufacturing sectors, notably office machinery and equipment, and electrical appliances. However, it is the acceleration in Sweden´s defence spending that may greatly assist in rebalancing demand. In response to changing geopolitical conditions following the war in Ukraine and precipitating Sweden’s membership of NATO in 2024, the Government is accelerating spending on defence over the coming years to reach approximately 3.5% of GDP by 2030. The plan aims to transform Sweden’s defence capability and requires material procurement and capability upgrades across air, sea and ground forces. As a result, the spill-over to industry is significant and has a wide geographic reach. In particular, Gothenberg will benefit from expansion of its aerospace defence corridor with demand for production plants, precision engineering units and its supply chain. Indeed, the defence policy is probably of greater significance to the Swedish industrial and logistics dynamics than US tariff policy.
Global Supply Chains are Driven by Local Industry
Understanding the risk and opportunities in industrial and logistics markets requires a deep understanding of how global industry dynamics impact on supply chains at the local scale. In this paper, we have selected one policy – the US tariff policy – to demonstrate its impact at an inter-regional, country and local scale. At a macro-scale the Swedish economy and the industrial and logistics market is resilient, but at an industry and local market scale there are pockets of risk and opportunity.
[5] Riksbank.se, OECD (2023), “Guide to OECD Trade in Value Added (TiVA) Indicators, 2023 edition”, November 2023.
[6] SEB (2025) Nordic Outlook, August;