“Everyone is stunned by these decisions”

“We are looking at every possible way to keep this open, but I am not optimistic,” says Þórhildur Ólöf Helgadóttir, CEO of Iceland Post, in an interview with mbl.is about the difficulties and uncertainty now facing parcel deliveries to the United States.

15% Tariffs on All Business Shipments

“After the change, a 15% tariff will apply to all shipments from businesses, and it is the sending country that must collect and remit the tariff to U.S. authorities. Shipments from individuals will be exempt from duty, provided the value does not exceed 100 dollars [about ISK 12,300]. The tariffs will be based on the product’s country of origin, not the country of dispatch. For example, a shipment from Iceland containing goods manufactured in China will carry a 50% tariff, not 15%,” she explained, noting how complex the situation is.

Grandma and the wool mittens

“The U.S. announced at the end of July that it intended to impose tariffs on Europe, and we are caught up in that. They want all goods to be tariffed based on their country of origin. So if, for example, a souvenir shop in Iceland has puffins made in China and sells them to the U.S., the origin is China, and the tariff applies as such,” she said.

“But if a grandmother knits wool mittens, buys the yarn at Álafoss, and sends them to a buyer in the U.S., the product is considered Icelandic in origin and tariffed accordingly on behalf of the U.S. authorities. That shows how crucial origin is,” she added, giving another example:

If an Icelandic clothing maker imports yarn from China and then knits hats in Iceland, the producer must assess what proportion of the final product is Chinese versus Icelandic.

Freight companies held liable

“Now many countries around the world are suspending postal deliveries to the U.S. We’re considering whether we might find a way through other Icelandic shippers, even if we can’t technically send them ourselves,” Helgadóttir said.

“What’s happening is that freight companies, and even airlines transporting goods to the U.S., are being made responsible for ensuring shipments are properly tariffed. That’s highly unusual,” she added.

For Icelandic online retailers, this means they must declare the country of origin so the carrier can ensure the correct tariffs are applied in the U.S. “The responsibility is being placed on the carrier — so if the mittens you knitted are classified as 40% Chinese because the yarn came from there, then that’s how the tariff is applied,” she explained.

This results in shipments falling into different tariff categories. “It’s impossible, really, because freight companies just move boxes from A to B. They rarely know what’s inside,” Helgadóttir said. While Icelandic customs already inspects shipments at Posturinn and issues clearance, U.S. authorities are now requiring tariffs and clearances to be handled in advance, before goods leave for the U.S.

If documents are incorrect, shipments may be undeliverable or returned at the sender’s expense. It is crucial, she said, that senders include tariffs in their sale price to ensure they are not left with unexpected costs or reduced profit margins.

60-day grace period likely

Asked what Iceland Post will do now, she said: “We’re working on a technical solution. Everyone is stunned by these decisions — that someone can make such burdensome rules and push the work, unpaid, onto other countries. We need to find a solution that works globally, and efforts are underway.”

U.S. Customs issued its instructions on August 15, according to Helgadóttir, explaining how the new rules should be applied. The timeline, she stressed, is extremely tight.

“Most countries in Europe have already said they will temporarily stop sending parcels to the U.S.,” she noted, adding that reports suggesting the U.S. abolished its $800 duty-free threshold are misleading. Instead, the threshold was lowered from $800 (around ISK 98,000) to $100 (ISK 12,300). “With Icelandic prices as they are, very few parcels fall below that value,” she said.

“I heard today that it’s very likely a 60-day grace period will be given. But either way, the reality is that people will need to find other ways of getting parcels to the U.S.,” Helgadóttir concluded, describing the situation now facing European nations, their postal services, and millions of consumers.