Interaction with the stellar wind and accompanying radiation can result in significant atmospheric erosion, potentially affecting a planet’s ability to host life. Previous research indicates the atmospheres of close-in, low-mass planets are highly vulnerable to the effects of XUV driven photoevaporation. However, the effects of the stellar wind on low-mass exoplanet atmospheres have only just begun to be addressed. We present 3D magnetohydrodynamical (MHD) simulations of the effect of the stellar wind on the escaping atmosphere of a magnetized planet in the habitable zone of a low-mass M dwarf. We use the TRAPPIST-1 system as the basis of our simulations and model the planet to have an H-rich evaporating outflow, with a pre-defined mass loss rate. Our results show the atmospheric outflow is dragged and accelerated upon interaction with the stellar wind, resulting in a diverse range of planetary magnetospheres which are strongly dependent on the local stellar wind conditions through the orbit and can vary over timescales as short as an hour. We explore the implications of this wind-outflow interaction on potential observations of escaping atmospheres and show that stellar wind interactions provide an explanation for observed variations in transit absorption features.