Iceland’s Prime Minister Kristrún Frostadóttir has reaffirmed her government’s decision not to impose counter-tariffs on the United States in response to escalating trade tensions. Despite the pressure from rising tariffs, Frostadóttir emphasized Iceland’s commitment to free trade and expressed hope that tariffs would eventually decrease. While the Trump administration has announced a 90-day pause on tariffs for most countries, including Iceland, Frostadóttir expressed concern about potential spillover effects on Iceland’s trade relationship with the EU, highlighting the need to keep supply chains open.
Frostadóttir also supported the EU’s need to show “strength” against the Trump administration but stressed the importance of ensuring that retaliatory measures do not negatively impact neighbouring countries like Iceland. She emphasized the need for clear messages from the EU that respect the relationship with its main trading partners, stating that trade should not be adversely affected. Frostadóttir highlighted Iceland’s historical and positive relationship with the EU, noting the importance of upholding responsibilities within the European Economic Area for the country’s economic stability and future.
Reflecting on her political journey, Frostadóttir discussed the evolution of her focus on domestic issues, such as social democratic policies, to include international relations. She emphasized the importance of bringing public engagement into international politics, making security and Iceland a concrete matter for everyday households. Frostadóttir stressed that governance, whether domestic or international, must be hands-on and transparent, involving the public domain rather than being limited to bureaucratic institutions abroad.
Amidst powerful shifts in the geopolitical order, from Russia’s invasion of Ukraine to the trade war initiated by President Trump, Iceland plans to hold a referendum on EU accession by 2027. Frostadóttir highlighted the need for a “balanced” discussion about this crucial decision, considering the impact of the current geopolitical situation. She expressed concern about the potential for polarized debates on reopening accession negotiations and emphasized the importance of having a wider discussion that includes topics like trade, economy, finance, and culture. While Frostadóttir stated that Iceland currently feels safe where it is, the decision on EU membership will involve careful considerations of various factors.
The trade tensions between the US and its partners have raised concerns about the potential impacts on global trade and supply chains. Frostadóttir’s decision not to impose counter-tariffs on the US reflects Iceland’s commitment to free trade and its desire to maintain stable trade relationships. Despite the 90-day pause on tariffs, the prime minister expressed worries about escalating tariff wars and their effects on Iceland’s trade ties with the EU. She emphasized the need for the EU to demonstrate strength in its interactions with the US while ensuring that retaliatory measures do not harm smaller countries like Iceland.
As Iceland prepares for a referendum on EU accession, Frostadóttir stressed the importance of engaging in a balanced and informed discussion about the decision. The evolving geopolitical landscape, including events like the Ukraine crisis and the US trade war, will play a role in shaping Iceland’s approach to potential EU membership. Frostadóttir’s focus on public engagement and transparency in governance extends to international relations, emphasizing the need for citizens to be involved in discussions about security and foreign policy. Overall, Iceland’s stance on trade, EU relations, and potential EU membership reflects a commitment to stability, transparency, and informed decision-making in the face of global challenges.
