I blame the Phoenicians. They controlled the tin trade from Western Europe and they would seed false rumours of what lay beyond the pillars of Hercules to deter anyone else from exploring past that point and endangering their monopoly. “Tin islands” sounds like something they came up with to keep people looking in the wrong place.
Plato's description of the "shoal mud" beyond the Pillars of Hercules -- leftover crud from the sinking of Atlantis, sez Plato -- sounds like something taken from the Phoenicians/Carthaginians (rumors spread to keep competitors out of the Atlantic). Tin mining in Cornwall is quite ancient; even if that were the only place it was being mined, the whole archipelago could have been named after that activity.