Earlier quoted context omitted.
I understand that Norway doesn't have duty-free import of goods into the EU. What I'm referring to is that the existing tolls and import duties weren't negotiated with the assumption that Norway has tariff-free access to the biggest producer of cheap goods in the world. I elaborated a bit on this in a sibling comment[1], but let's say for example that the import duties on electric drills from China into the EU are se…
Norway certainly can't import Chinese drills at 0% and then re-export them to Germany under the Norwegian tariff. Those drills are still of Chinese origin, and re-labeling them otherwise would be illegal. Only Norwegian drills can benefit from Norway's 10% tariff. As for goods of mixed origin (manufactured in Norway but benefiting from Chinese inputs/components), that is indeed where things get complicated. And that'…
Right now this situation exists in theory, but in practice pretty much nobody in the EU has any cause to try to import something via Norway, since its trade deals are quite similar to what the EU itself has.
But the EU has huge tariffs on some Chinese products, including slapping China with 30-70% tariffs on basic metal alloys in some cases[1][2].
The difference can be so large that it becomes beneficial for you as a private EU citizen to drive up to Norway yourself to fetch e.g. basic alloys at lower prices.
Nothing remotely like this situation exists within the land borders of Schengen today. There's the agreement with Iceland, but as it's an island enforcement is much easier.
1. https://www.cnbc.com/2017/06/09/reuters-america-update-2-eu-...
2. https://www.theguardian.com/business/2016/oct/07/european-un...