Switzerland Faces 39% Tariff from US After Trump Rejects Revised Deal

The US has imposed a 39% tariff on Swiss exports, including luxury watches and Nespresso coffee capsules, as the government failed to secure a revised deal with President Trump. The tariff is the highest among developed countries and applies to all products loaded onto a vessel for transport to the US. Pharmaceuticals and gold are exempt, but if the tariff comes into effect across the board, up to 1% of Switzerland's economic output could be at risk.

The United States has imposed a 39% tariff on Swiss exports, including luxury watches and Nespresso coffee capsules, as the government failed to secure a revised deal with President Trump. The tariff, effective August 7, is the highest among developed countries and applies to all products loaded onto a vessel for transport to the U.S. Pharmaceuticals and gold are exempt, but if the tariff comes into effect across the board, up to 1% of Switzerland's economic output could be at risk [1].

The move, part of a broader strategy to address U.S. trade deficits, has stunned Switzerland, where officials had anticipated leniency given the country's proactive steps to liberalize trade. Switzerland exported almost $61 billion in goods to the U.S. last year, about one sixth of its total exports [1]. The tariff could see the price of luxury goods from the country, as well as precision instruments and medical devices, skyrocket if the two countries don’t reach a deal by the deadline [1].

Switzerland is home to the world’s finest watch makers—like Rolex, Patek Philippe, Omega, TAG Heuer and Audemars Piguet—as well as the Lindt chocolate company, Nestle’s Nespresso coffee, precision instrument maker Mettler Toledo and medical device manufacturers Alcon and Sonova [1]. Most Swiss watch companies are not publicly traded, but Rolex reseller Watches of Switzerland Group, which is listed on the London stock exchange, saw shares fall more than 9% on the news [1]. Richemont, which owns watch brands Jaeger-LeCoultre and Cartier, among others, was down 3% late Friday morning and Swatch, the parent company of Omega and Longines, also dipped slightly [1].

Switzerland's economy, renowned for its precision engineering and luxury exports, is now grappling with an unprecedented threat from across the Atlantic. The tariff rate is among the highest levied by the Trump administration, dwarfing those on allies like the European Union (15%) and the United Kingdom (10%) [2]. Swiss President Karin Keller-Sutter, facing domestic backlash, rushed to Washington for emergency talks, but initial reports suggest limited concessions [2]. Shares in major Swiss firms plunged upon the announcement, wiping out billions in market value [2].

Economists project a potential 0.4 percentage point hit to Switzerland’s GDP if the tariffs persist, exacerbating risks of recession amid already softening global demand [2]. The tariff is part of a broader strategy to address U.S. trade deficits, with Switzerland's $38 billion trade surplus with the U.S. being a key focus [2]. Switzerland lacks the leverage of a massive consumer market or military alliances to negotiate from strength, making it a "soft target" for Trump’s protectionist agenda [2].

The Swiss government has indicated openness to revising offers, possibly including enhanced market access or investment pledges, but outcomes remain uncertain [2]. The broader implications extend beyond economics, with Switzerland's vaunted banking secrecy and role as a hub for multinational firms potentially facing scrutiny [2]. The episode underscores the vulnerabilities of mid-sized economies in an era of resurgent protectionism, with urgent negotiations continuing to avoid long-term damage to Switzerland’s brand as a reliable trading partner [2].

References:
[1] https://www.forbes.com/sites/maryroeloffs/2025/08/01/switzerland-slapped-with-super-high-39-us-tariff-impacting-these-luxury-imports/
[2] https://www.webpronews.com/us-imposes-39-tariffs-on-swiss-watches-drugs-over-38b-surplus/