"The new system means that there will be no cheese exports more or less," said Fredrik von Unge at dairy industry organization Svensk Mjölk to the TT news agency.

The Norwegian government has mooted the massive hikes in import tariffs on cheese and meat products in its budget for 2013.

Hard cheeses are set to be subjected to import tariffs equating to 277 percent of their value. Tolls are currently 27 Norwegian kroner ($4.70), regardless of value.

Norway is also planning to raise tariffs on imports of lamb and beef.

Denmark has responded angrily to the new Norwegian import tariff regime, while Sweden is reluctant to enter into a "trade war" with its Scandinavian neighbours.

The Norwegian Agrarian Association (Norges Bondelag) however welcomed the move.

"It is absolutely crucial if we are to have a farming industry in Norway or not," according to Nils Bjørke at the association.

"If you look at the development in Sweden, where milk production is declining, this confirms that we have a duty to maintain agriculture. Customs tariffs limit the growth of imports and are a signal from the authorities that they want farming in Norway," he said.

The decision will have a significant impact on the Swedish cheese industry as Norway is currently the largest export market.