Navigating the New Tariff Landscape and Strategic U.S. Expansion Opportunities for Finnish Businesses

Recent actions by the U.S. administration have dramatically reshaped the international trade environment. President Trump announced that the U.S. will impose tariffs, as of February 4, 2025, on goods imported from Canada, Mexico, and China. Specifically, the new measures include

While these developments directly affect the targeted countries, it is important for Finnish stakeholders to note that the European Union—of which Finland is a member—is also likely to face related tariff measures in the near future. President Trump has recently remarked that he will “absolutely” impose tariffs on good from the EU. Such tariffs may serve as a bargaining tactic. Speculation persists that this could be connected to President Trump’s broader strategic objectives, such as potentially acquiring Greenland, though his ultimate intentions remain unclear.

The level and extent of the tariffs remain unclear. The EU will undoubtedly respond to any tariffs imposed by the Trump administration on European products. During the first Trump administration in 2018, the EU imposed additional duties on U.S. imports worth EUR 2.8 billion in retaliation for U.S. tariffs on steel and aluminum of EU origin. The trade war was defused later in July 2019, when the parties reached an agreement on bilateral trade relations, including the EU’s commitment to increase U.S. imports. A similar resolution could occur this time as well, potentially involving the EU agreeing to increase imports of U.S. gas and oil products to help balance the U.S. trade deficit with the EU.

Given the uncertain landscape at the EU level, Finnish companies may consider mitigating exposure to potential tariffs by relocating some operations to the United States. This strategy is supported by the existence of Memoranda of Understanding (MOUs) between Finland and several U.S. states—including Colorado, Maine, Michigan, Minnesota, Texas, and Washington. These MOUs are designed to foster enhanced cooperation, economic development, and partnership opportunities, thereby providing a more stable environment for business operations and cross-border investments.

Finnish businesses looking to establish a U.S. presence can choose between two primary entry strategies: greenfield investment and brownfield M&A.

Greenfield investment involves establishing a new subsidiary or operation from scratch in the United States. Companies must build their facilities, recruit local talent, and develop new customer relationships and supply chains. While this method provides complete control over the business setup and culture, it also requires more time and initial capital.

Alternatively, businesses can acquire an existing U.S. company. This strategy—whether through share (or membership interest) acquisitions or asset deals—allows companies to take over established facilities, employees, suppliers, and customers. Brownfield transactions are often considered less burdensome and may pose lower risk overall; however, they necessitate comprehensive and thorough due diligence to identify any potential liabilities or operational challenges.

In a share (or membership interest) acquisition, the buyer acquires the equity interests (shares or membership units) of the target company. This approach results in gaining ownership of the entire business entity, including its assets and liabilities. The primary advantage is continuity—the company’s existing contracts, permits, and relationships remain intact—but hidden liabilities may also transfer to the new owner.

Alternatively, a buyer may choose to purchase specific assets and assume selected liabilities of the target company. This method allows for greater selectivity, as the buyer can choose to acquire only the most attractive parts of the business. However, asset deals may involve more complex negotiations over which assets and liabilities are transferred, and they can sometimes trigger tax or regulatory issues that must be carefully managed.

When engaging in brownfield acquisitions, it is crucial to understand the type of U.S. entity being acquired, as this will affect taxation, governance, and liability. The most common types are C-Corporation (C-Corp), S-Corporation (S-Corp), limited liability company (LLC) and limited liability partnership (LLP). A C-Corporation is a legally distinct entity taxed separately from its owners. It allows an unlimited number of shareholders but is subject to double taxation on corporate earnings and dividends. An S-Corp is similar to a C-Corp in legal protection but offers pass-through taxation—taxing income only at the shareholder level. However, it limits the number and type of shareholders. An LLP combines the limited liability of a corporation with the tax efficiencies and flexibility of a partnership, offering pass-through taxation and less formal governance. An LLP is often used by professional service firms and provides pass-through taxation and shields individual partners from liabilities incurred by the partnership or by other partners.

In light of the rapidly evolving tariff environment and the potential ripple effects on the European Union, Finnish businesses should consider strategic U.S. expansion as a means to hedge against trade uncertainty. Whether through greenfield investments or brownfield acquisitions—via share or asset deals—relocating operations to a stable and partner-friendly U.S. state could provide significant long-term benefits. As always, companies should undertake comprehensive due diligence and seek tailored legal and tax advice when considering such cross-border transactions.

For further information on how the Finland–US partnership states can facilitate your U.S. expansion, please visit the Finland Abroad – USA Partnership States page.

If you have any questions about this Legal Alert, please feel free to contact the undersigned or your regular Borenius contact.