Switzerland is reeling from a major trade blow just after outlook steep tariffs were announced by the United States. At first, former President Donald Trump retaliated by… threatening a 31% tariff on all Swiss goods. Right before the August 1st deadline, he upped that ante to 39%. This sudden surge has sparked a tsunami of confusion and anger among Swiss businesses and government leaders. This is all the more true given that the US has recently imposed the highest tariffs on Switzerland in all of Europe.
Consider the fact that in 2024, the American trade deficit with Switzerland stood at a shocking $47.4 billion. Donald Trump will rail against just such a situation, saying it endangers US interests. In doing so, President Karin Keller-Sutter, head of the Swiss government, and her fellow cabinet members aggressively pursued negotiations with US officials to lower the tariffs. Sadly, their collective efforts could not lead to a fruitful compromise. This outcome has understandably raised alarms about possible economic fallout on both countries.
Despite the challenges posed by these new tariffs, Switzerland had previously taken steps to foster better trade relations by reducing its own tariffs on US industrial goods to zero. Further raising the stakes, a handful of large Swiss firms—including Nestlé and Novartis—had committed multibillion-dollar investments in US plants. These investments are the lifeblood of our economy. Switzerland is the sixth largest source of FDI in the US, supporting over 400,000 American jobs.
The current tariff environment has put this mutually beneficial economic relationship at precarious risk. EconomieSuisse, a group that promotes the interests of Swiss firms, warned against harming Switzerland’s longstanding relationship with the United States. They cautioned that forcing these extraordinarily high tariffs on Switzerland would put thousands of jobs in the small country at risk. This is particularly so for industries that depend on exports to the US.
Noting the US’ importance to Swiss commerce, Swiss exports to the US are dominated by pharmaceuticals, gold jewelry, watches, and machine tools. Curiously, Switzerland exports far more to the US than it imports from us. When we factor in service industries, the trade deficit with the US virtually disappears down to $22 billion. This shift further demonstrates that the bilateral trade relationship is anything but simple.
As part of these efforts, President Keller-Sutter joined forces with US Trade Secretary Scott Bessent in Geneva. This meeting was a constructive first step towards finding a way to negotiate and cooperate in the face of increasing tensions over retaliatory trade policies. Countless Swiss officials and business leaders are concerned about the future of their strong economic ties with the US. Their alarm has only grown by the lack of progress made.
The increasing tariffs and outstanding trade clashes are an obvious sign that a stormy path lies before Switzerland’s economy. However, now, businesses find themselves under an unpredictable cloud. This development could have far-reaching consequences on both sides of the Atlantic. As they assess their strategies in light of these developments, the hope remains that diplomatic dialogue can pave a way for resolution.