Nordic Credit Rating's long-term issuer ratings on our rating portfolio remain unchanged following Donald Trump's announcement on 2 April 2025 that the US would impose tariffs ranging from 10% to 46% on imports from other countries. The tariffs will take effect on 5 April. We have identified several issuers in our portfolio with direct exposure to the US market, which will be directly impacted by the tariffs. NCR-rated issuers with significant exposure to the US are mainly Norwegian corporates. Many of these firms have production facilities in various countries, and some might avoid the impact of the tariffs by having US domestic production. The tariffs on Norwegian imports to the US are set at 16%, compared to 20% from Sweden and the EU. However, we believe the Norwegian rate could be reduced to 10% after negotiations.
Below, we summarise several issuers with significant exposure to the US market.
Elopak
The company's largest market is the US, contributing approximately 21% of its full year revenues for 2024. Most of the production occurs at the Montreal plant in Canada. However, tariffs are expected to be absorbed by clients. The new facility in Little Rock, Arkansas (US) aims to meet increasing demand from new and existing customers, with the first production line scheduled for operations during H1 2025. The US plant may allow the company to avoid tariffs on some of its production.
Salmon farmers (Mowi, SalMar, Lerøy Seafood Group and Austevoll Seafood)
US consumers account for more than 20% of the global salmon consumption. While most salmon consumed in the US is imported from Canada and Chile, the US is also a key market for the European producers. Approximately 5% of Norwegian salmon is exported to the US. We believe that Chile and Scotland will gain US-based market share from Norway and Canada due to a lower (10%) import tax on these countries. However, this will open up for more export of Norwegian and Canadian salmon to markets where Chile and Scotland are reducing export. A significant price hike in the US could affect demand and global pricing, though we would expect this impact to be moderate as salmon demand typically shows low sensitivity to price changes. Mowi operates in all major salmon farming regions, whereas the other rated farmers primarily focus on Norway, with notable operations in Scotland.
Kongsberg Gruppen
Approximately 23% of the company's 2024 full-year revenues come from North America. The company benefits significantly from Europe's ongoing rearmament and a growing number of investment mandates in the defence sector. If US demand decreases, we expect increased European demand to counterbalance any negative effects from US tariffs.
Nordic Semiconductor
About 17% of the company's full-year revenues for 2024 came from the Americas. The company primarily sells its components to distributors in Asia, who then sell them to electronic manufacturers. The company has faced challenges with demand visibility after the pandemic. Although this has improved over the last few quarters, we expect the newly announced tariffs to increase uncertainty about future visibility. We believe that it is too early to determine whether demand will soften, as the company could pass on potential price increases to end customers due to often substantial switching costs. The company remains conservatively capitalised with a strong net cash position.
Other issuers
We are concerned that tariffs may soften demand and reignite inflation in the US market, with reciprocal tariffs driving inflation in Europe and compounding the impact on these and other issuers. Other NCR-rated issuers with limited or no US exposure may also be affected by tariffs due to implications for domestic consumption, interest rates and investment risk sentiment. Currently, swaps rates are rising, indicating higher interest rates than previously anticipated, and reversing previous expectations of further decline. We believe that rising inflation and interest rates could impact banks' profits and credit losses, while real estate companies' may see slower rebound in their interest coverage.
We are closely monitoring the situation and evaluating its potential impact on the issuers we rate.
This commentary does not constitute a rating action.
Contacts:
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com