Iceland hit with 10% U.S. import tariffs
The Minister of Finance says it is never a good idea to impose tariffs on Icelandic products. Composite image
Daði Már Kristófersson, Iceland’s Minister of Finance and Economic Affairs, has responded to the U.S. government’s decision to impose a 10% import tariff on Icelandic products, calling the move “not good news” — but also noting that Iceland may have fared better than many of its trade partners.
“Of course, we are a small and open economy, and we want as few barriers to trade as possible. That’s why tariffs on Icelandic products are never good news,” Kristófersson said.
“But we didn’t imagine such a big difference between us and our main trading partners.”
Trump’s Tariff Shake-Up
U.S. President Donald Trump announced on Wednesday night a sweeping new trade policy:
- A minimum 10% tariff on all imported products
- 20% on EU goods
- 15% on Norwegian goods
- 31% for Switzerland
- A staggering 37% for Liechtenstein
By comparison, Iceland — with its 10% tariff — finds itself in the lowest bracket, and Kristófersson says that outcome was unexpected.
“We perhaps did not have the imagination to believe that there would be such a big difference between our main trading partners.”
Concern for high-value exports
While the impact is not expected to be dramatic, Kristófersson’s main concern is with Iceland’s “fourth pillar” exports, such as software and pharmaceuticals, where global competition is already intense.
“We’re most concerned about software, pharma, and similar industries. But this didn’t turn out as bad as we anticipated — and quite different from our forecasts.”
The Ministry of Finance is preparing a full analysis, expected within days. The government will assess the implications and whether any opportunities might emerge from being in the lowest tariff group.
No immediate impact on Icelanders
At the moment, Kristófersson does not expect the tariffs to impact Icelandic consumers.
“Analysts say this may drive inflation in the U.S., but not necessarily here. If demand falls in the U.S. while staying stable elsewhere, that could even lower prices.”
He also notes it’s too soon to determine how the tariff structure might affect Iceland’s relationship with the EU, where member states face a 20% import tax.
Regarding retaliatory tariffs, like those proposed by the EU, Kristófersson says no discussions have taken place.
“We need to make a cold-blooded assessment of interests. It’s not entirely clear this is all bad, though tariffs of this kind are certainly not good.”
Could Iceland’s Fish Industry benefit?
One potential silver lining lies in Iceland’s competitive advantage over Norway, whose exports to the U.S. are now subject to 15% tariffs, 5% higher than Iceland’s.
This could especially benefit Icelandic whitefish, where Iceland and Norway are fierce competitors in the U.S. market.
However, Kristófersson warns that higher prices for Icelandic goods may still reduce overall demand. The hope is that the smaller price increase relative to competitors could help Iceland maintain or even grow market share, especially for niche products with few substitutes.
“If the products are unique, or if we’re small players in a specific segment, this could work to our advantage. But in markets with many alternatives, even a slight price increase could hurt.”
Sigurður Hannesson, chairman of the Confederation of Icelandic Industries (SI). mbl.is/Eggert Jóhannesson
U.S. tariffs raise concerns for Icelandic exports
Sigurður Hannesson, chairman of the Confederation of Icelandic Industries (SI), voiced concern over the new 10% U.S. import tariffs on Icelandic products, noting that external conditions are deteriorating.
“The United States has been a growing market for Icelandic products, so this is a concern for exports,” Hannesson said in an interview with Morgunblaðið .
While Iceland escaped the steep tariffs imposed on other countries, with the EU facing 20% tariffs and Switzerland up to 31%, uncertainty looms for exporters.
“This may create opportunities”
Still, Hannesson acknowledged there may be a silver lining: “It is true that, relatively speaking, we are coming out of this better than various other countries, so that may create some opportunities.”
However, he emphasized that stability and clarity are crucial moving forward, and much depends on how global trade patterns shift in response to the tariffs.
Industry demands: Keep Iceland competitive
Hannesson outlined two key priorities for the Confederation of Icelandic Industries:
- Prevent Iceland from being targeted by EU tariffs, in possible retaliation against the U.S.
- Strengthen Iceland’s business competitiveness across the board.
“We are looking at aspects such as regulations, supervision, taxes, and fees. We are looking at conditions for research and development, which have been favorable and must continue to be so. We are looking at electricity issues, for example,” he said.
These comments reflect growing pressure on the Icelandic government to shore up the domestic business environment in the face of global trade disruptions.
Amid the tariff fallout, Iceland's Secretary of State at the Ministry of Foreign Affairs held a meeting yesterday with the Deputy U.S. Ambassador to Iceland to discuss the matter.
