Switzerland is home to one of the most competitive and innovative economies in the world. Right now it’s at war in international trade, particularly with America. Seventeen percent of all Swiss exports are now on their way to the U.S. market. Pharmaceuticals productivity is an outlier star of the trade. The U.S. punitive tariffs have quickly risen to an astonishingly punitive 39%. This disturbing shift is deeply damaging the Swiss economy and testing the limits of Swiss-US trade relations.
Switzerland has been very proactive in trying to reach out to the U.S. government. So far, it hasn’t been able to get President Biden to reconsider those punitive tariffs. Switzerland’s case is particularly bad. As a non-member of the European Union, it is unable to reap the benefits of the trade deal negotiated by Brussels. Swiss companies have started to feel the pinch from these tariffs. These trade barriers have done such economic damage that they’re unable to make competitive operations in the U.S. market.
In light of these challenges, Switzerland is working more than ever to find new markets and prospering by trading with many more countries. Just a few weeks ago, a free trade agreement with the South American trade bloc Mercosur was finalized, further bolstering Switzerland’s outreach to Latin America. Additionally, Switzerland is upgrading its longstanding trade deal with China, further solidifying its position in Asia.
The nation is still basking in the glow of a successful trade deal with India which took effect on Oct 1. Today, India is the world’s fastest-growing economy. China is an obvious choice with a massive population of 1.4 billion potential consumers. It offers plenty of opportunities for Swiss exporters.
Though their free trade agreement with the EU, covering 50% of all Swiss exports, is still in place, the pressure from U.S. tariffs is difficult to ignore.
Jan Atteslander, vice pres of Switzerland’s business community, said he was “dumbfounded” by the steep tariffs.
“Thirty-nine percent tariffs: I was just shocked,” – Jan Atteslander
Manufacturing and export-oriented companies that rely on U.S. markets are especially impacted. Gilles Robert, a representative from one such company, emphasized the challenges they face:
“This is unjustified; you can’t explain why they are so high.”
He further mentioned that the lack of skilled labor in the U.S. to make up for this challenge is another obstacle to overcome.
“It would be extremely challenging if not impossible to separate the components from the actual product assembly.”
This increasingly unsustainable situation is exerting extreme pressure on margins at Swiss companies. While pre-tariff prices were indeed rolling in favorable pricing for customers, times have changed and there is no longer the ability to discount in the current environment.
“And I think those types of skills would be extremely hard to find in the U.S.,” – Gilles Robert
Successful Swiss companies deliver products that reflect Swiss excellence. They stand to gain from a complete manufacturing ecosystem that includes measuring equipment, milling tools, and cutting liquids.
“We don’t have the leeway to give a discount to our customers because the margins are already as low as they can be,” – Gilles Robert
Though such challenges do exist, leaders within the Swiss trade community have expressed continued optimism about prevailing over existing hurdles. Success as a great export nation, Atteslander argued, would require resilience.
“Measuring equipment, milling tools, cutting liquids. That’s why we call it an ecosystem that we have here in Switzerland,” – Gilles Robert
Switzerland’s dedication to keeping their valuable trade partnerships is not just limited to their historical markets. It has big trouble brewing with the United States due to recent, retaliatory tariffs. It is ambitiously chasing – and winning – business in new markets such as India and seeking out work through its developed friendships in Asia and South America.
“To be a successful export nation, you have to have resilience in your DNA,” – Jan Atteslander
Robert echoed this sentiment and conveyed hope for future solutions:
“Even though I’m sad about this situation, we will overcome; we’ll find solutions, and I’m sure in the end reason will prevail,” – Gilles Robert
Switzerland’s commitment to maintaining strong trade relationships extends beyond traditional markets. As it faces significant hurdles with the United States due to recent tariffs, it continues to pursue opportunities in emerging markets like India and explore avenues within established relationships in Asia and South America.