How the US elections affect the Swedish economy

The Democrats’ sweeping victory in the US midterm elections on November 3 means that the party has gained control of both the Senate and the House of Representatives, fundamentally changing the political landscape for President Donald Trump’s remaining two years in office. As the United States is one of Sweden’s most important trading partners, these developments also have implications for Swedish businesses, savers and investors. But what can we actually expect in the wake of the election?

Trump's tariff policies face growing opposition

One of the most significant issues for the Swedish economy is US trade policy, particularly the extensive tariffs Trump has imposed on imported goods. According to the Stockholm Chamber of Commerce, Swedish exports of goods to the United States fell by nearly SEK 29 billion across the ten largest product categories during the first year following the tariff announcement in spring 2025, although exchange rate fluctuations and changing demand also contributed to the decline.

The Democrats’ victory gives Congress greater opportunities to scrutinise the administration’s tariff policies and attempt to limit the president’s room for manoeuvre. Trump still retains considerable authority to impose tariffs, but the Democrats can use budget negotiations and legislation to push for changes. For Swedish exporters, a reduction in trade barriers could improve their ability to compete in the American market, potentially benefiting investors holding shares in these companies.

Greater need for economic compromise

With Democratic majorities in both chambers of Congress, Trump will find it more difficult to introduce further tax cuts or sweeping budget changes without support from the opposition. At the same time, the Democrats will gain greater influence over government spending and economic priorities.

This could mean that certain economic reforms are delayed or renegotiated, while budget negotiations become increasingly important in shaping the direction of the US economy. For Swedish savers and investors, these developments matter because American economic growth, inflation and government borrowing requirements influence international financial markets, including Swedish interest rates and asset prices.

The dollar and interest rates affect Swedish households

The shifting balance of power in Washington also influences expectations surrounding US economic policy, which may in turn affect the dollar exchange rate and bond markets.

A weaker dollar makes American goods cheaper for Swedish consumers but also reduces the value, in Swedish kronor, of investments in US stocks and funds, provided those investments are not currency hedged. A stronger dollar has the opposite effect, meaning that exchange rate movements can significantly influence returns for Swedish investors even when their underlying investments perform well.

Changes in US market interest rates can also affect borrowing costs in Sweden and the valuation of various investments, although the Riksbank makes its own monetary policy decisions based on conditions in the Swedish economy.

What does this mean for your savings and investments?

For savers and investors, developments in trade, inflation, exchange rates and interest rates will be particularly important to follow. The Democrats’ victory changes the conditions under which US economic policy is shaped, but the actual consequences will depend on which agreements Congress and the president ultimately manage to reach.

The US midterm elections also illustrate just how closely interconnected international financial markets have become, with political decisions made in Washington capable of influencing everything from Swedish exporters’ sales to the value of Swedish households’ savings and investments. Understanding these connections makes it easier to put market movements into a broader perspective and make well-informed, long-term investment decisions.