Switzerland nears deal to cut US tariffs to 15% after business push

Exports account for more than 70 per cent of Switzerland’s GDP. Copyright 2021 The Associated Press. All Rights Reserved

Switzerland is inching closer to a deal to cut punishing US tariffs on its exports to about 15 per cent, as companies from Rolex to Richemont take the lead in breaking months of deadlock between Bern and Washington.

After months of frustration and stalled diplomacy Swiss business leaders stepped in to drive the talks forward, moving from lobbying on the sidelines to engaging directly with the Trump administration. Companies said they were starting to feel the strain of the 39 per cent tariffs imposed on most Swiss goods in August — the highest levies faced by any developed economy.

According to several people briefed on the discussions, Switzerland is closing in on a 15 per cent rate — matching the rate levied on the EU’s exports to the US. Several put the timeframe as being only several weeks away but others said the situation was fluid and could drag on longer.

US President Donald Trump said on Monday that he had not yet settled on the tariff rate he would impose on Switzerland, but confirmed Washington was “working on a deal to get the tariffs a little lower”.

“We hit Switzerland very hard. [But] we want Switzerland to remain successful,” Trump said from the Oval Office.

Swiss shock

Swiss negotiators led by president and finance minister Karin Keller Sutter had believed they were close to reaching an agreement of about 10 per cent tariffs in the summer only for the White House to impose 39 per cent — shocking the country’s politicians and business leaders.

Switzerland itself has already abolished all industrial tariffs and the US is the country’s top export market for goods including watches, chocolate and machinery. Trump signalled that the estimated $39bn US trade deficit with Switzerland was the key reason for the high levy.

Keller-Sutter, whom Trump complained “didn’t want to listen” to his complaints about the US trade deficit with Switzerland, later handed responsibility to economy minister Guy Parmelin, who will assume the federation’s rotating presidency next year.

However, the private sector has become the driving force that has shifted the impasse after months of little progress, people close to negotiations said. Switzerland’s original messaging — that the 39 per cent tariff on its goods was unfair — was dropped in favour of a more pragmatic push led by companies themselves, the people said.

Executives from watchmaker Rolex, Cartier owner Richemont, commodity trader Mercuria, private equity firm Partners Group, shipping company MSC and refiner MKS PAMP met Trump at the White House last Tuesday, according to two people familiar with the situation.

The Swiss side emphasised the robust economic collaboration and relationship between the two countries at the Oval Office meeting, the people said.

‘Great honour’

Trump posted on Truth Social that it had been his “great honour” to meet “high-level representatives of Switzerland”, saying the two sides had discussed trade “and most importantly, trade imbalance”, and that his trade representative Jamieson Greer would now pursue follow-up talks with Bern.

The approach to trade talks plays to Switzerland’s traditional strengths, say experts.

Exports account for more than 70 per cent of GDP and the country’s global influence has long rested on its corporations — from watchmakers and commodity traders to pharmaceutical giants — rather than its political heft, according to Simon Evenett, professor of geopolitics and strategy at IMD Business School in Lausanne.

“It looks like CEOs can cut through better than federal councillors . . . [the Swiss] are playing their strongest card,” said Evenett. “A deal is still more likely next year but [this] is a positive sign.”

WEF announcement?

Another person said there was a “high chance” a deal could also be announced in January at the World Economic Forum in the Swiss resort of Davos. Trump is expected to attend the annual event.

Callista Gingrich, the new US ambassador to Switzerland who is the wife of former US House Speaker Newt Gingrich, may also inject momentum, said Rahul Sahgal, chief executive of the Swiss-American Chamber of Commerce.

“The situation is still open and the meeting with business leaders is complementary to what the Swiss government has been doing,” Sahgal added.

Helene Budliger Artieda, head of the SECO body which implements Switzerland’s economic and trade policy measures, has also played a pivotal role, travelling multiple times to Washington in recent months.

Days after Trump’s meeting with business executives, Parmelin posted on X that he had a “very constructive” conversation with Greer.

The economy ministry and SECO did not immediately respond to a request for comment.

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