Macro Focus - June 2018
Nordic and Baltic economies vulnerable to US trade tariffs

US steel and aluminium tariffs to worsen business sentiment, but small direct effect on growth in the Nordics and the Baltics

  • There are no winners in a trade war – tariffs will hurt the US as much as the EU
  • The direct effects on exports and imports are small, but an escalation of trade tensions are likely to hit business and consumer sentiment, reducing investments and consumption 
– Swedish total exports of steel and aluminium less than 1% of GDP. Metals exports to the US approx. 0.1% of GDP

  • US tariffs on steel and aluminium, and EU retaliation, will effect the Nordic economies mainly through worsened business sentiment (the Nordics and the Baltics) and financial market volatility (The Nordics)
– The initial reaction on markets are limited so far, but may worsen if trade tension continue to escalate

– Lower equity prices in countries such as Sweden with a large manufacturing sector 

– Safe haven flows and risk off reaction in bonds 

– Negative effects on currencies in small open economies, such as SEK 

  • Tariffs and retaliation may cause some inflationary pressures, but we expect such effects to be small in the near term as the magnitude of tariffs are still small
  • Trade tensions to continue with retaliatory measures being prepared by the EU, Canada and Mexico. Moreover, the US expected to announce new tariffs on Chinese products on June 15
PDF Read the full analysis/report here (PDF)

For more information, please contact: Anna Breman, Group Chief Economist, phone:+46703149587 

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