US Imposes 39% Tariffs on Swiss Exports, Including Watches and Pharma Firms

Switzerland's exporters, including watch makers and pharmaceutical companies, are bracing for financial fallout from US President Donald Trump's 39% tariffs. The levies are part of Trump's effort to reshape international commerce, affecting Switzerland's $60.9 billion worth of exports to the US. Watch makers, such as Rolex and Richemont, are particularly threatened, while pharmaceutical companies Novartis and Roche are also impacted. The tariffs "threaten Switzerland with enormous economic damage," according to Interpharma, the association of drug research companies in the country.

Switzerland's exporters, including watch makers and pharmaceutical companies, are bracing for financial fallout from US President Donald Trump's 39% tariffs. The levies, announced on July 31, are part of Trump's effort to reshape international commerce, affecting Switzerland's $60.9 billion worth of exports to the US. Watch makers, such as Rolex and Richemont, are particularly threatened, while pharmaceutical companies Novartis and Roche are also impacted. The tariffs "threaten Switzerland with enormous economic damage," according to Interpharma, the association of drug research companies in the country.

The tariffs are significantly higher than the 31% rate Trump had threatened in April. The Swiss government expressed "great regret" over the new tariff rate, which differs "significantly" from a draft framework the countries had been negotiating. Bern's trade negotiators were caught unawares by the announcement, despite receiving encouraging signals from several senior US officials [1].

The Swiss franc was among the worst performing major currencies on Friday, sliding 0.2% against the US dollar. Still, it remains more than 8% stronger than it was before the initial April 2 tariff announcement. The Swiss economy rests on large contributions from industry giants Novartis and Roche Holding. Drugmakers face a double squeeze as Trump escalates his campaign to pressure them for lower prices, sending letters to 17 of the world’s largest pharma companies demanding they charge the US what other countries pay for new medicines [1].

Swissmechanic, an industry lobby group, called the 39% rate "dangerous." It urged the government to negotiate in the narrow window till the tariffs are set to come into effect on August 7, which otherwise risks leaving the economy becoming "one of the few countries that permanently struggle with structural competitive disadvantages" [1].

The rate on Swiss exports to the US is markedly higher than other trading partners who were able to negotiate frameworks with the US. The European Union, Japan, and South Korea all landed on 15% levies [1]. The seven-day window for the new tariffs to be implemented provides time for additional negotiations for those interested in reducing reciprocal or sectoral rates – Switzerland, India, Taiwan might still be working on those talks [1].

Trump's tariff rate comes despite months of high-stakes diplomacy intended to complete an agreement, negotiations that forced Bern to balance its commitment to global openness against the protection of domestic agriculture. The industry represents less than 1% of the economy but commands out-sized political influence, and farmers’ lobbyists had threatened to fight any settlement affecting Swiss high-tariff barriers in the area [1].

Switzerland might not have been able to offer the US the concessions other countries were able to provide. It already had unilaterally scrapped industrial tariffs. Suggesting lower import rates for American citrus fruits, nuts, and shellfish – plus simplified approval for medical devices – may not have been tempting enough [1].

Trump’s Apr 2 tariff announcement had put Switzerland’s exporters in a double bind as it also caused a sharp Swiss franc appreciation. That prompted the Swiss National Bank to cut interest rates to zero after it had previously signaled it was done with easing [1].

References:
[1] https://www.businesstimes.com.sg/international/global/switzerland-hit-steep-39-tariff-us-trade-blitz