Sweden and the world await for a definitive outcome of the US election. While the emotional response in Swedish households is one-sided, from a business and diplomatic perspective, Sweden is ready to do engage with whatever administration forms.

Below is an excerpt of an article that appeared in the November 2020 edition of the Monthly Policy Review

Sweden and the US

The entire world’s attention is currently focused on the United States and the outcome of one the most consequential elections in its history on 3 November, 2020.

Arguably the most important bilateral relationship for Sweden (and for most countries) is its relationship with the United States, the world’s largest economy and hegemonic power.

Sweden was one of the first countries to recognise US independence in 1783, commencing a long period of friendship and strong relations. Although most Swedish exports still go to the EU, US-Swedish two-way trade amounted to USD 25.5 billion in 2019, and the two countries invest over USD 94 billion in each other’s economies. Despite Sweden’s small size, it is the thirteenth largest investor in the US, supporting over 200,000 US jobs. Sweden is even more dependent on the US: about 25% of Swedish companies’ global revenues come from the US, with more than 1,600 Swedish companies active in the country.

It is not only trade that is important for Sweden’s relationship with the US. While outside of NATO, Sweden has defence cooperation agreements with the US, including a trilateral agreement with Finland.

Early in his presidency, Trump proved uniquely unpopular in Sweden, with nearly 80% of the country expressing a negative opinion of the President. The figure makes sense considering that at least 75% of Swedes would have cast their hypothetical votes for Hillary Clinton, the Democratic candidate, in 2016. Around that time, Sweden reclaimed the phrase “last night in Sweden”, and the country’s official promotional bodies used the hashtag #LastNightInSweden in nation branding materials.

While European nations in general have suffered strained relations with the US during the Trump administration, and although Biden is believed to represent a reset to those relations, bilateral ties between Sweden and the US remain comparatively strong. Trump’s lack of popularity with the Swedish public did not necessarily translate into a breakdown in relations between the two states, although they may be cooler than with past administrations.

The outcome of the election and impact on Sweden

But would a Trump re-election significantly negatively affect life for the average Swedish person, or even a Swedish company? And would Biden actually prove to be better for Sweden? The answer may be mixed. Certainly, Biden is more of an ideological ally of the current centre-left Swedish Government, but this distinction should not significantly affect bilateral relations. 

While some economists do not think that either presidential candidate represents a major risk to Swedish households or firms, Swedish firms themselves seem considerably more optimistic about the prospects of a Biden presidency. Ultimately, this optimism may come less from a sense that Biden will better serve the economy than from a belief that he is more stable and predictable: Biden has a long relationship with Europe and a five-decades-long political career at which one can look to gauge what he is likely to do in office; Trump, meanwhile, has often produced policies that were unexpected. To the extent that trade-reliant Swedish business prefers long-sightedness, Biden might always seem a safer bet, whatever the economists say.

That said, both candidates will probably promote protectionist trade policies to a degree that will be sub-optimal for Sweden and Swedish business – at least at first.

Looking beyond trade, we do not expect Sweden’s relationship with the US to change significantly in other areas of foreign policy, at least in the short run.

We would, however, expect that Sweden will take steps to shore up the international institutions that it values but that the Trump administration has abandoned or undermined. The US is set to leave the Paris Agreement on climate change, for example – a policy that Joe Biden would seek to reverse. It is conceivable that Sweden will act to compensate for the lack of US leadership on combating climate change through other means.

➢ For more comments, see Mundus’ contributing editor, Ian Higham comments following the election here.