Navigating Trade Policy Uncertainty

Abstract

International trade of goods and services has served as a cornerstone of global economic growth. However, the modern trade market has been impacted by policy shifts incentivized by protectionist strategies. In April 2025, the United States implemented the “Liberation Day” tariffs, which caused severe uncertainty in the global market, affecting industries in all countries. The study aims to evaluate and analyse how the tariffs have affected the export strategies of Swedish manufacturers of industrial machinery, specifically how it has impacted their market prioritization and product allocation strategies after the tariffs were imposed. The empirical data was collected through interviews which were conducted with persons within five different Swedish industrial manufacturing firms. The empirical data was analysed through a thematic analysis and then compared with a conceptual framework. The study reveals that the tariffs have had a significant impact on firms’ strategic decisions relating to market prioritization and product allocation. First, the uncertainty created by the tariffs has prompted firms to reevaluate their market options, where some have strategically chosen to adopt a more passive approach and not seek other markets for growth, while others divert resources to other markets where new, favourable trade agreements are emerging. Secondly, firms with production operations in the U.S. have conducted supply chain reconfigurations to decrease the costs created by the tariffs when moving goods to the U.S. or its neighbouring countries. This has been made possible through actively bypassing the tariffs by either moving production to the U.S. or localizing it by moving production to Sweden. Firms without production operation in the U.S. have instead relied on existing setups.