Tariffs, Trade Wars, and Norway: Preparing for the New Economic Landscape

FEBRUARY 19th 2025

We give you the key takeaways from Innovation Norway’s briefing on how the trade war will affect Norwegian businesses.

Tariffs and Global Trade Shifts

What do we currently know? Currently, the U.S. has imposed a 10% tariff on imports from China, while tariffs on Canada and Mexico are delayed. Furthermore, the U.S. has announced an implementation of a 25% tariff on steel and aluminum. For a small, open economy like Norway, which is highly dependent on foreign trade, such protectionist measures have negative consequences.

Norwegian trade partners: Norwegian exports are predominantly directed toward the European Union (EU), which accounts for 65% of the country's trade, followed by the United Kingdom at 20% and the U.S. at 3%. In terms of mainland exports, the EU remains the largest market at 57%, with the U.K. and the U.S. both at 8%. As such, trade disruptions involving key partners like the U.S. or the EU could have ripple effects throughout Norway’s economy.

Norway's Trade Deficit to the U.S. & Diplomacy

Norway has experienced a trade deficit with the U.S. since 2014, importing more from the U.S. than it exports.

Given President Trump's focus on balancing trade and creating surpluses, it will be important for the Norwegian government to communicate this in negotiations with the Americans.

Norwegian diplomacy is actively working to explain Norway’s contributions to European and American supply chains. A coordinated effort between the Ministry of Foreign Affairs, Innovation Norway, and other key stakeholders is essential in defending Norway's interests in international trade.

EU Protectionist Measures: A Key Concern

A significant concern raised during the webinar was the possibility of the EU introducing protective measures to shield its own markets in response to the trade wars. Innovation Norway emphasizes the importance of ensuring that Norway is not adversely affected by these protective measures.

Although not a member of the European Union, Norway is linked to the EU market through the The European Economic Area Agreement.

Innovation Norway stresses that in this evolving trade landscape, the EEA agreement plays a crucial role in safeguarding Norway’s access to the EU market. As global trade seem to shift towards a system of trading blocs, securing continued access to Norway’s by far largest market is vital for the country's economic stability.

Tariffs and Different Types

A tariff is a tax or fee that has been used since Roman times. It serves both as a protective mechanism and a trade policy tool.

There is a distinction between protective tariffs (to protect domestic production) and retaliatory tariffs (used in trade war scenarios). For example, Norway has a high tariff on cheese (277%) to protect local cheese producers.

Preparing for Uncertainty - Diversify markets and supply chains to spread risk.

Norwegian businesses need to be adaptable and prepared for rapid changes in global trade policies, and are encouraged to remain flexible, diversify their markets, and explore alternative suppliers to minimize risks. A proactive approach is essential in navigating the uncertainties of protectionist trends.

Companies should communicate challenges to trade associations, which can relay this information to the Ministry of Foreign Affairs.