Switzerland Faces Economic Turmoil as U.S. Imposes 39% Tariffs on Exports

Switzerland finds itself in a state of confusion and frustration following the United States' decision to impose the highest tariffs on Swiss goods in Europe, a significant blow considering the country's expectations prior to the announcement. The unexpected 39% tariff, higher than initially threatened, comes as a shock to the Swiss government and businesses alike, altering their trade landscape dramatically.

In the global context, Switzerland now faces some of the world’s highest tariffs, trailing only Syria, Laos, and Myanmar. There is speculation that Brazil could surpass Switzerland if a looming 50% tariff threat by President Donald Trump materializes. With these developments dominating the news, Swiss media has drawn historical metaphors, comparing the situation to notable defeats like that of the Battle of Marignano in 1515.

Not long ago, Switzerland was optimistic. In May, during a Swiss-hosted meeting aimed at easing tensions between the U.S. and China in Geneva, President Karin Keller-Sutter held discussions with U.S. trade secretary Scott Bessent, emerging confident. Promises of negotiations suggested Switzerland might secure favorable trade conditions, following the United Kingdom. Hints of a 10% tariff offer were floated, a stark contrast to the 31% initially proposed by Trump, which too had seemed considerable.

But all optimism has evaporated. A final attempt at negotiation via phone call between Keller-Sutter and President Trump yielded no relief, with the announcement soon confirming an even harsher 39% tariff. Swiss political discourse now focuses on dissecting negotiation strategies, contemplating whether Switzerland was too stringent or overly accommodating. Some attribute this setback to Switzerland's trade deficit with the U.S., valued at $47.4 billion in 2024, which, if considering services, reduces to $22 billion. Switzerland’s primary exports to the U.S. include pharmaceuticals, gold jewelry, watches, and machine tools—categories where it sells more to the U.S. than it buys.

In attempts to balance this deficit, the Swiss government had already lowered tariffs on U.S. industrial goods to zero, in tandem with large investment commitments from major Swiss companies like Nestlé and Novartis towards U.S. operations. Switzerland ranks as the sixth largest investor in the United States, contributing to the creation of approximately 400,000 jobs. Yet, this significant investment effort seems insufficient to avert the imposition of the prohibitive tariffs.

The relatively small Swiss population, along with cultural preferences against U.S. products like certain vehicles and food items, displays an inherent challenge in increasing imports from the U.S. This sentiment reflects a broader struggle to realign trade balances under the new tariff conditions, as the Swiss economy grapples with the potential fallout.

The Swiss foreign trade sector, represented by Jan Atteslander of EconomieSuisse, has expressed the necessity for dependable U.S. relations to ensure business stability. This highlights a growing concern among Swiss enterprises about the unpredictability of U.S. trade policy, which has now introduced significant uncertainty into Swiss economic planning.

As August 7th marks the deadline for the tariffs' enactment, Switzerland hurriedly seeks diplomatic solutions. Swiss businesses warn of massive job losses if the tariffs persist unchanged, provoking considerations of retaliatory actions, such as withdrawing investment offers or instituting reciprocal tariffs. The idea of canceling orders for U.S. F35 fighter planes surfaces as a last resort, emphasizing the severity of the situation.

Amidst this economic upheaval, Swiss National Day celebrations are overshadowed by the disappointing trade news. Swiss President Karin Keller-Sutter, in her holiday address, emphasized the constraints faced in negotiations, underscoring the U.S. focus on the trade deficit as the primary impasse, suggesting President Trump’s unwillingness for compromise affected the outcome.

The mood in Switzerland is subdued, as the populace contends with the ramifications of these tariffs. Despite past resilience against economic shocks, there is acknowledgment within Switzerland that this new challenge will demand both innovation and perseverance to navigate. With only a week left before tariffs take effect, Switzerland remains hopeful for an eleventh-hour resolution that aligns with its legal and international obligations, though the outlook remains uncertain.