Tariff-Related Price Shocks and Swedish Passenger Vehicle Exports to the United States : A Time-Series and Scenario Analysis of Tariff-Related Price Changes

Sammanfattning

This thesis examines how Swedish passenger vehicle exports to the United States may respond to tariff-related price adjustments. The analysis uses monthly data for 1995-2025 and focuses on Swedish passenger vehicle exports, U.S. light vehicle sales, U.S. interest rate on car-related financing, and the real SEK/USD exchange rate. A dynamic regression model with ARIMA errors is used to capture both economic relationships and time-series dynamics. The estimation results suggest that Swedish passenger vehicle exports to the United States are most clearly associated with demand conditions in the U.S. vehicle market and with price competitiveness. U.S. light vehicle sales enter the model with a positive and statistically significant coefficient, indicating that stronger demand in the destination market is associated with higher Swedish exports. The real exchange rate also enters with a positive and statistically significant coefficient, included with a six-month lag, suggesting that a stronger U.S. dollar relative to the Swedish krona is associated with higher export volumes. The interest rate variable enters with a positive coefficient that runs counter to theoretical expectations and is therefore given less weight in the interpretation of the results. The study also includes a scenario analysis in which tariff changes are approximated as price shocks through the relative-price channel. Two alternative tariff-rate scenarios, 10 and 25 percent, are compared with a baseline forecast. The results suggest that a higher assumed tariff is associated with lower export volumes in the model, with larger effects under the 25 percent scenario. These results should be interpreted as sensitivity estimates of the relative-price channel rather than as precise forecasts of export outcomes.