Its announcement came after President Donald Trump said that he intends to impose tariffs on steel and aluminium imports.
“We're freezing our investments,” Electrolux spokesman Daniel Frykholm was quoted as saying by the Swedish news agency TT.
“We need to analyze the taxes and see how the market reacts,” he said, adding “but to be clear: this is a message to the (Trump) administration this is a real negative for us”.
According to Swedish public television channel SVT, the investment of $250 million is to modernize an Electrolux factory.
Frykholm said the intention of Trump to impose tariffs of 25 percent on steel and 20 percent on aluminium imported into the United States “could render economically unjustifiable” the planned investment in the factory.
Electrolux tried to buy the home appliance business of General Electric in 2015 but the deal ran into opposition from competition authorities in the United States, where it sells goods under both its own name and the Frigidaire brand.
The tariffs on steel and aluminium come after Donald Trump campaigned on an “America First” platform, promising to throw up barriers to protect US jobs.
While the US steel and aluminium industry welcomed Trump's announcement, it provoked ire in other US industries which could find their products the subject to trade reprisals from other countries.
The announcement was greeted with fury within key US trading allies such as Canada, the EU, Australia and Mexico, as well as rival China.