U.S. 39% Tariffs on Swiss Goods Fuel Recession Fears Amid Export Crisis

The imposition of a 39% U.S. tariff on Swiss goods has sent shockwaves through Switzerland’s economic landscape, raising concerns of a potential recession. This rate is significantly higher than the 10–15% tariffs imposed on goods from other developed nations like the EU, Japan, and the UK. The Trump administration cited a $38.5 billion trade deficit with Switzerland as the rationale, but Swiss officials have described the policy as a potential economic disaster [1]. Diplomatic efforts, including a last-minute visit by President Keller-Sutter and discussions with officials such as Marco Rubio, failed to yield any compromise, with the U.S. maintaining its position [1].

The Swiss watch industry is particularly vulnerable to the new tariffs. With 17% of total Swiss watch exports—valued at around $5.4 billion annually—destined for the U.S., the additional costs could make these products unaffordable for many American consumers. A 39% tariff, combined with a strong Swiss franc, is expected to push retail prices up by 60% or more, potentially devastating smaller watchmakers and vintage dealers [1]. Similar challenges are emerging in the chocolate sector, where producers face a 50% cost increase due to currency effects and tariffs. While large firms may shift production abroad, smaller firms lack such flexibility [1].

Switzerland’s gold industry is also at risk. The country processes over 2,000 tons of gold annually and exports $61 billion worth to the U.S. alone. The new tariffs, expected to add $24 billion in costs, threaten Switzerland’s position as the world’s largest gold refining hub [1].

The initial market reaction was muted, with the Swiss Market Index even rising slightly on the day the tariffs took effect. However, luxury goods firms like Richemont, Swatch Group, and LVMH saw their shares fall by 5–6% after the news broke. The Swiss franc’s appreciation of 11–12% against the dollar over the past year has compounded the challenges, making Swiss exports less competitive. The Swiss National Bank may need to consider further negative interest rate measures to stabilize the economy [1].

Swiss companies are already adapting, with some, such as Swatch Group, reportedly building inventory in the U.S. Others are raising prices, as seen with Breitling, which is increasing the price of certain models from $10,800 to $14,500. While some firms are exploring new markets, none can realistically replace the economic significance of the U.S. market [1].

The Swiss government has taken a cautious stance, avoiding retaliatory measures that could harm the domestic economy. Despite diplomatic efforts, no resolution has been reached. Political discussions have even entertained unconventional solutions, including a potential mediation role for FIFA President Gianni Infantino, though it remains unclear whether such ideas are serious or merely symbolic. For now, the tariffs have exposed a vulnerability in Switzerland’s otherwise robust economic model, and without swift resolution, the fear of a recession may soon become a reality [1].

Source: [1] title1……………………………………………………………………………………………………………………………………………………………(https://coinfomania.com/us-tariffs-spark-fears-of-recession-in-switzerland/)