Switzerland faces income losses from US tariffs, says ETH Zurich

KOF expects "income losses" for Switzerland due to customs duties Keystone-SDA

ETH Zurich’s Centre for Economic Research (KOF) has warned that US tariffs could hit the Swiss economy hard. The higher cost of exporting goods might lead to income losses of up to 0.5%.

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“Trade tensions sparked by the US administration’s tariff policy pose significant risks to Switzerland’s export-driven economy,” says a KOF report released on Wednesday.

In several scenario analyses, the institute estimates “real income losses” for the Swiss economy between 0.2% and 0.6% due to the 31% tariffs on Swiss exports to the US. “These income losses can be roughly seen as gross domestic product (GDP) losses,” says the KOF.

+ US tariff shock: adding up the Swiss bill

Compared to European trading partners like Germany and France, Switzerland would face “significantly higher losses.” And this is just under the current scenario: “If tariffs were imposed on pharmaceutical products, the real income losses would rise sharply,” warns the KOF.

Duration is crucial

Another key factor is the duration of these measures. If trade barriers keep rising and more countries are affected, “amplification effects” could increase real income losses by 1.3 times.

The longer these customs measures persist, the greater the impact of structural changes is likely to be. Restructuring supply chains and production capacities is not only expensive but also poses uncertainties in quality, efficiency and stability. The KOF estimates these scaling factors to be over 1 and “significantly higher in extreme cases.”

UBS has already cut its GDP forecasts for the next two years by half a percentage point per year. The major bank says the US tariffs directly impact around a third of Swiss exports to the US, with exemptions for pharmaceutical products and gold. UBS notes that, besides watches, “price-sensitive” goods like machinery and medtech products are particularly affected.

Translated from German with DeepL/sp

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