The indirect effect of Trump’s customs policy
« These tariffs are coming on in July, but the overall picture is that this is no end of the world for us, although this will have any impact on our companies and the economy, » says Bergþóra Baldursdóttir, economist in Íslandsbanki’s analysis, asked an opinion on Donald Trump’s customs policy.
« Of course, this affects the global economy and we are part of it, but fortunately we are not in more trade with the United States than this, regarding the export of products. »
It is Bergthora’s opinion that the biggest concern for Iceland in the long term was tourism, which is one of our main export sectors. If the impact on the US economy becomes great, it says the US is likely to hold hands and reduce travel.
The Icelandic stock market took a great dip
She says Iceland is well -liked based on the situation today – 10% duty on export goods to the United States – which she says is considerably clearer than, for example, the European Union with 20% tariff and Norway with 15% tariffs.
« Given this, we are actually in a rather good position, although the Icelandic stock market has taken a great dip with the news and in our opinion more dip than reason, » she adds.
What do you mean by that?
« This had a slight impact on the stock market in this country, but it is probably the uncertainty and threat of the indirect effects of tariffs that had its say in the market, which fluctuated even more than in countries that received higher tariffs. »
Bergþóra Baldursdóttir, economist in Íslandsbanki’s analysis, says tourism says the greatest concern in the long term in terms of US customs policy.
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One in four travelers are Americans
Bergthora says Icelanders’ greatest concern in the long term is the country’s tourism – « which has an indirect impact throughout the economy ».
« One in four tourists coming to Iceland is American. How this handles the US economy is what we are worried about in the long term. In times of uncertainty, people have it to hold hands, and let them go abroad.
If Americans Let it go abroad, skip coming to Iceland, it has an indirect effect on our economy. The tourism industry is already getting a little hit, at least it’s not growing as fast as it has been. «
Now the tourism industry has grown considerably over the last 15 years. Do you think the economy can get a little hit?
« She’s today has become one of our main export sectors, but I think she can totally get this clash, she proved it a bit in Covid, but this is a very big part of our tourists.
Fortunately, many of them come from the higher classes of the United States, of course, it is very expensive to travel and stay in Iceland, and these changes in the United States have less influence on the income of people – it feels less for them than the ordinary citizen, who is positive for Icelandic tourism. «
Thus she says unlikely to Americans stopped coming to Iceland, but they will certainly decrease, based on the situation today.
Customs placed on medicines and medicinal products
Based on figures from 2024, about 12% of Iceland’s exports go to the United States. In this context, Bergthora says Trump’s customs policy will not have a big impact on the Icelandic economy.
« This is not more than 12% of our exports. Of course, this is a 10% duty but other countries have higher tariffs, we are in competition with Norway for the fish, for example, so that as we look at this we just get out of this as it is today. »
However, she notes that it may be a matter of concern that drugs and medicinal products have initially not been included in Tolla Trump, but he has changed his mind and will now impose tariffs on those products.
« We transport most of the fish to the United States, but next are drugs and medical products.
« A small island that needs no extra tariffs »
« In the big context, this will have no huge impact if this is what this will be – 10% duty on export goods. The worst result would be if we landed in a customs war between some countries. »
Do you think we’re looking forward to it?
« No, I don’t think. The government has been in contact with other countries we have in business, precisely about not landing in any customs war and that international trade between other countries is pure. »
Then she says there is no prospect that Iceland is on its way to a customs war with the United States by raising tariffs.
« I don’t hear it being in the movie, fortunately, I think it would never be positive for the Icelandic economy.
It would be mainly if the European Union sets some tariffs and we land on those tariffs. But I know that we are always reminded of us, even though we are not in the European Union, that we are just a small island that needs no extra tariffs. «
