The current uncertainty surrounding U.S. tariff rates functions as an invisible trade barrier and may cost Danish firms access to the American market.

This is the topic of an oped in Finans written by CEFAU Centre Director Professor Phillip Schröder and Senior Analyst Tine Jeppesen. They point out, among other things, that there is significant potential for increased trade both within and beyond Europe if policymakers work to dismantle barriers. They further argue in favour of export promotion initiatives such as export credit guarantees, which can support Danish exporters in a world where uncertainty has become the norm.

Read more here. 

In a new CEFAU brief, we examine Danish SMEs' export exposure to the United States in the light of the new trade policy realities.

The analysis shows:

• In 2024, the United States was the fifthlargest export market for Danish SMEs, and the number of SMEs exporting to the U.S. increased steadily from 2015 to 2024
• Compared to larger firms, Danish SMEs' exports from Denmark to the U.S. are particularly concentrated in sectors with a lower likelihood of tariff exemptions
• SMEs are more vulnerable to rising trade costs than larger firms. They typically have fewer options for bypassing tariff barriers, for example through local production, and they often operate in fewer export markets making it more difficult to redirect exports elsewhere
• However, only a small share of Danish SMEs with direct exports to the U.S. export a large proportion of their total exports to the U.S
• Overall, the analysis indicates that SMEs are particularly exposed to the new U.S. trade policy direction, but the overall consequences for Danish exports will be limited. This is because SMEs account for a relatively small share of Denmark's total exports to the U.S., and because only a limited number of SMEs are strongly exposed to the American market
• One way to support individual SMEs exporting to the U.S is through exportpromotion initiatives for example, advisory services on U.S. tariff and export regulations to reduce uncertainty, as well as assistance in identifying new markets.

Read more here

The findings show that exporters typically reduce their exports to the affected countries - even when their products are not directly subject to the sanctions. The impact on a firm's economic performance largely depends on how exposed the firm is to the sanctioned markets. Therefore, it is important to have a clear picture of which firms and sectors are potentially affected - even when sanctions only target specific individuals, entities, or products.

Similarly, it may also be beneficial to enhance existing export-support initiatives, such as advisory services and guidance for companies, when implementing new sanctions to reduce indirect effects.

Today, we are publishing a CEFAU Research Brief based on Ina's and Saskia's articles. The Research Brief provides perspective and describes the findings from peer-reviewed research. Here are three key take-aways:

1. Sanctions also affect the exports of products that are not directly covered by the sanctions
2. Sanctions come in many different formsfrom export bans to travel restrictionsand their effects vary across countries depending on the type and purpose of the sanctions
3. The impact of sanctions on the economic performance of exporters largely depends on how exposed they are to the sanctioned markets.