More Secure Export Deals with Support from EKN

“2025 has been a turbulent year for global trade – and hopefully, April marked the peak of the US’s extreme trade policies,” says Stefan Karlsson, Chief Analyst at EKN, the Swedish Export Credit Agency.

He is referring to Donald Trump’s aggressive tariff strategy, which has shaken global trade recently. In April, the US imposed general tariffs of ten percent on all countries, followed by even higher country-specific tariffs – which were quickly paused. Simultaneously, a trade war with China was initiated, with tariff levels reaching up to 145 percent. Additionally, targeted tariffs were imposed on steel, aluminum, and cars, among other things.

Now, Stefan Karlsson sees a cautiously positive momentum in the unfolding events.

“Currently, we have a pause in the trade war between the US and China, as well as a new agreement between the US and the UK. This shows that the Americans are interested in negotiating, which is very important.”

However, the Chief Analyst believes that tariffs – and the uncertainty surrounding them – remain one of the primary trade barriers for Swedish export companies this year.

“It’s difficult for companies to know how to plan right now, especially those with high exposure to the US. Should they remain patient, try to relocate their production to the US, or conversely, start looking for other trading partners – and if so, where?”

Driving New Trade Agreements

According to Stefan Karlsson, the US’s U-turn regarding free trade doesn’t necessarily have to be entirely negative for Swedish companies, at least in the long term. Firstly, the pressured situation may force companies to rationalize even faster and become more efficient to keep costs down. Secondly, the development could boost the creation of new free trade and association agreements, opening the door to new markets.

“Some of these agreements have been debated for ages without success, but the situation with the US should create increased pressure on the negotiating parties.”

A highly topical free trade agreement – which has been negotiated for a quarter of a century and was concluded in December last year – is the one between the EU and the Mercosur countries: Brazil, Argentina, Uruguay, and Paraguay. The agreement is now awaiting final approval from, among others, the EU member states. Viktoria Piirainen, Country Analyst at EKN, believes that the agreement would be one of the world’s largest in terms of the number of people affected.

“Moreover, the Mercosur countries are traditionally closed markets with high tariffs on many goods. Over 90 percent of merchandise exports in both directions will be tariff-free with this agreement, so it could mean entirely new opportunities for Swedish exports over time, especially for small and medium-sized enterprises that do not have their own production in these countries,” she says.

Eyes on Latin America

The Mercosur agreement could therefore be a reason for Swedish exporters to turn their attention to Latin America in the search for new markets. But there are more, notes Viktoria Piirainen – not least that competition within the EU may intensify further, which may motivate companies to broaden their horizons.

“The Latin American market shows several strengths. One is that it, with a few exceptions, has withstood these five tough years that have offered everything from pandemics to soaring inflation and interest rates. Many countries in the region have learned from the debt crises of the 80s and 90s and have fiscal frameworks, independent central banks, floating exchange rates, and a reasonably sound banking sector, all of which have dampened the negative effects,” she says.

“There are also several countries in Latin America that already have free trade or association agreements with the EU, such as Mexico, Chile, Colombia, and Peru. The conditions for simple and tariff-free trade are already good there.”

Varying Sensitivity to Trump’s Tariffs

Of course, the Latin American markets are also affected by the US tariffs, but with great variation. Over 80 percent of Mexico’s exports go to the US – but further south, in Argentina, Brazil, Chile, and Peru, the proportion is a more modest 8–15 percent.

“These countries can of course still be indirectly affected by the tariffs, as they can affect global demand and commodity prices. This is something that we at EKN are following closely,” says Viktoria Piirainen.

Where There is the Most to Gain

Which niches are particularly interesting for Swedish companies that want to invest in Latin America? Viktoria Piirainen highlights three areas where the Latin American countries are strong:

1. Energy-intensive operations:

“Latin America is a region that has plenty of renewable energy. Paraguay and Costa Rica, for example, are almost entirely powered by fossil-free energy, and the average regional share of renewables in the energy mix is 60 percent – almost twice as high as the global average. This may be attractive to Swedish, energy-intensive operations that want to establish themselves locally,” she says.

2. Mining industry:

“This industry is large in the region, and Swedish companies have cutting-edge technology, know-how, and sustainable solutions to contribute.”

3. Consumer markets:

“Latin America already has some of the world’s largest economies, such as Mexico, Brazil, and Argentina – and demand is growing.”

Plenty of Support Available

For companies that want to take the step into the Latin American market, Viktoria Piirainen recommends getting support from experts and utilizing government support.

“There are Swedish companies that have more than a century-long presence in Latin America – contact them and take advantage of their lessons! In addition to that, there is plenty of support available, including from Business Sweden and Swedish Chambers of Commerce.”

When companies then need to obtain the financing required to open up or intensify their presence in Latin America, EKN can be of assistance.

“EKN reduces the payment risk for exporting companies, their subcontractors, and banks – like an insurance company. When companies want to enter a new market, we ensure that the risk does not stand in the way. In addition, we have supported deals in Latin America since 1933, the year we were founded, so we have valuable insight into how to do business here.”

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About EKN

EKN, the Swedish Export Credit Agency, has the government’s mandate to promote Swedish exports and the internationalization of Swedish companies. This is done by insuring payments and sharing risks with exporting companies, their subcontractors, and banks. The operation is financed with the policyholders’ premiums.

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