Impact of Customs Overhaul Shakes Up Global Trade in Switzerland
The United States has imposed a 39% tariff on Swiss exports, a move that could have significant negative impacts on key Swiss export sectors and the broader Swiss economy. This tariff, one of the steepest globally, will increase costs for Swiss exporters in the American market, potentially reducing their competitiveness and sales volume.
The tariff poses a significant threat to Swiss companies, particularly in the sectors of chocolatiers, watchmakers, and pharmaceutical companies. These sectors accounted for almost half of Swiss exports to the U.S. in 2024. Major Swiss pharma companies like Novartis AG and Roche Holding AG face additional challenges as U.S. efforts simultaneously push for lower drug prices, creating a double squeeze from tariffs and pricing pressure.
Given these sectors form large parts of Switzerland's economy, the tariffs could lead to slower growth or contraction in export-driven industries. This could weaken the Swiss franc as a market reaction and create broader economic uncertainty. The tariffs could also potentially affect the job security of the 400,000 Swiss jobs created in the U.S.
The tariff rate was imposed despite ongoing negotiations and differs significantly from previously discussed frameworks, indicating deteriorated bilateral trade relations and complicating future agreements. Economiesuisse, the Swiss business federation, expressed concern over the tariffs as a "very serious burden" for the Swiss economy. Swissmechanic, the industry association for small and medium-sized enterprises in the metal, electrical, and machinery sectors, shares the concern.
The Swiss government regrets the imposition of these tariffs as the hoped-for agreement on a lower rate did not materialize. However, as of now, the Swiss government has not publicly stated any retaliatory measures against the U.S. tariffs. The business associations urge the Swiss government to work towards a reduction in the tariffs in the coming days.
It's important to note that the U.S. is the largest sales market for Swiss companies, with exports totaling 65.3 billion Swiss francs (70.2 billion euros) last year. The tariffs will come into effect on August 7th and are part of a list of U.S. tariffs on various countries.
While Germany follows as the second-largest market for Swiss exports, with 45.2 billion Swiss francs, the impact of these tariffs could be more pronounced in the U.S. due to its status as the largest sales market. Swiss companies have created around 400,000 jobs in the U.S., and any decline in sales could potentially impact these jobs.
The announcement was made by U.S. President Trump in April, and the tariffs surpassed the worst fears of the Swiss government. The tariffs exceed the previously proposed 31%, highlighting the escalation in trade tensions between the two countries.
In summary, the 39% tariff threatens to undermine Swiss exporters’ profitability and market access in the U.S., potentially slowing economic growth in key Swiss industries and straining trade relations. The Swiss government, businesses, and industry associations are urging for a reduction in the tariffs to mitigate these potential impacts.
Economic and social policy decisions, such as the imposition of a 39% tariff on Swiss exports, can have significant implications for the industry and finance sectors, as well as for the broader business community. This tariff, if not mitigated, could potentially weaken the Swiss franc, impact job security in both Switzerland and the U.S., and strain bilateral trade relations.
