After all, if Switzerland — often held up as the paragon of strong export economy — is suffering greatly at the moment. Its trade relations with the United States are in shambles. In fact, more than 17% of all Swiss exports are destined to the US market. This is a particularly urgent circumstance for all sectors, but especially the medical technology community. Since then, the US has imposed punitive tariffs of 39% on Swiss goods. This brave step forward has sent shockwaves through the Swiss business community and raised concerns that it is the beginning of the end for bilateral trade between the two countries.
The impact of the Swiss medical technology sector on US exports is enormous. For companies like MPS, which produces high-precision medical devices, are reeling with the effects of these tariffs. Adrian Hunn, the managing director of Swiss Medtech, emphasized the real impact of these tariffs to stifle innovation. He repeated his concern that such measures will hurt the industry’s competitiveness.
The economic implications are profound. According to Jan Atteslander, director of international relations at the Swiss business federation Economiesuisse, “Thirty-nine percent tariffs: I was just shocked.” He further added, “This is unjustified, you can’t explain why they are so high,” reflecting widespread frustration among Swiss exporters.
The failure of President Karin Keller-Sutter to even negotiate a reduction in these incredibly high tariffs has made matters worse. In fact, Swiss companies are responsible for over 400,000 American jobs. Today, they’re fighting an uphill battle to hold on to their national market share and their margins/profitability.
Gilles Robert, a representative from MPS, noted the operational difficulties presented by the tariffs: “It would be extremely challenging if not impossible to separate the components from the actual product assembly.” He highlighted concerns about the skills gap in the US workforce, stating, “I think those types of skills would be extremely hard to find in the US.” The added expenses have left companies with little flexibility. Robert stated, “We don’t have the leeway to give a discount to our customers because the margins are already as low as they can be.”
Nevertheless, these challenges have not stopped Switzerland from deepening its foreign ties. The country has historic trade agreements with China that are now being renegotiated. At the same time, Switzerland has just finished negotiating a free trade deal with Mercosur, South America’s major trade bloc. These changes are a welcome relief. They are not enough to offset, let alone neutralize, the negative impact from tariffs on their products going to the US.
In the meantime, Switzerland’s free trade agreement with the European Union remains in effect. The significance of this agreement cannot be overstated, as it represents 50% of Swiss exports. Without better access to the US market on reasonable terms, numerous Swiss companies have a dark future ahead of them.
As Atteslander pointed out, “These are companies that have very good products,” yet they are now confronted with significant barriers. Many have resorted to halting deliveries to US clients: “And they have told us, we just stopped delivering, sorry guys.”
The outlook is further complicated by Switzerland’s recent trade deal with India, termed “the fastest growing economy on the planet,” which came into force on October 1. While this agreement is a great boon to forward-looking Swiss companies, it doesn’t do anything to reduce the immediate damage done by US tariffs.