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Trump eyes free trade agreement with Iceland

Illustration of President Trump looking at a world map with Iceland highlighted
Illustration: Sarah Grillo/Axios

The Trump administration is eyeing a new trade deal with Iceland amid the U.S. trade war with China and tensions with Europe, officials tell me.

Why it matters: A potential deal isn't about Iceland’s economy, which offers little to the U.S. from a financial perspective. But the Arctic country is strategically located, and the president's national security team has emphasized the importance of investing in the region.

Between the lines: The discussions follow Denmark's blunt rejection of Trump's flirtations about buying Greenland. They also come at a time when China has sought to incorporate Iceland into the Belt and Road Initiative, and as Russia asserts its dominance in the Arctic Circle.

  • "There is a national security importance to that region — being able to strike trade deals and build an alliance with us and not China or Russia," one administration official said.
  • Remember, Vice President Mike Pence added Iceland as a leg on his recent swing through Poland and the U.K.

Behind the scenes: During a Senate GOP lunch last Tuesday, attended by Pence, Sen. John Kennedy strongly encouraged the administration to push forward with a free trade deal with Iceland, according to multiple senators in the room.

  • Alaska Sen. Lisa Murkowski then gave a similar vote of confidence and said she would support such an agreement.
  • Pence told them that there is a working group exploring a deal and that he is "amenable" to the idea.

I asked several other Republicans senators whether they would support a free trade agreement with Iceland.

  • Most said the topic caught them off guard when it came up during the lunch, but that they're open to it.

Worth noting: Iceland has had a free trade agreement with China since 2014.