US tariff escalation may price Norwegian salmon out of American market.
US President Donald Trump said on Saturday that the United States plans to impose a 10 percent tariff on countries opposing a proposed transaction between the US and Greenland by 15 February, with a possible increase to 25 percent from 1 June.
Countries named include Denmark, Norway, Sweden, Finland, France, Germany, the United Kingdom and the Netherlands.
According to DNB Carnegie, the proposed tariffs would have a measurable but limited impact on global salmon demand. The brokerage estimates that a 10 to 25 percent tariff would reduce global demand by 0.4 to 1.1 percent, all else being equal. Historically, a one percent change in supply or demand has corresponded to a NOK 1 per kilo change in salmon prices and around a five percent change in earnings per share.
DNB Carnegie said the salmon market has become less sensitive to US trade tensions, but still expects a negative market reaction. It estimates a share price decline of 2 to 3 percent for the sector in the near term.
The impact is expected to vary significantly between companies depending on market exposure. DNB Carnegie identifies Bakkafrost as the largest net loser among listed salmon farmers due to its exposure profile. Mowi is described as a net winner, alongside Chilean salmon farming companies, which are expected to benefit from reduced competition in the US market.
Reacting to the news, Aslak Berge, Editor of iLaks wrote: “With a 40 percent tariff, Norway is de facto out of the American market. The fish that would otherwise be sent to the United States will then have to be placed in other markets.”