US tariffs force Switzerland to rethink trade ties

"Switzerland first". This seems to be how the majority of the Swiss population wants to respond to Trump's tariff threats. Keystone / Christian Beutler

United States trade policy is rattling countries worldwide and prompting them to redirect trade flows at record speed. This is also how Switzerland is responding.

US tariffs have put many countries in a tight spot. Persistent uncertainty is only making matters worse: will the US president suddenly slap on further tariffs, despite all concessions, as he has threatened to do, and even done in the past?

This new reality has prompted many countries to scramble for new markets. Switzerland, having been hit with one of the highest tariff rates (39%), is no exception.

How the new US tariffs are already impacting the Swiss economy:

The State Secretariat for Economic Affairs (SECO) says that partner countries which had previously been cautious are now showing greater interest in concluding new trade agreements or updating existing ones. This diversification is being driven by new geopolitical and geo-economic realities.

“Switzerland is indeed pushing harder than ever to diversify its trade,” says Guido Cozzi, chair of macroeconomics at the University of St Gallen and an expert on global trade and markets. “Agreements with India, Mercosur and Thailand, which had stalled, are now moving forward. This reflects Bern’s determination to reduce its reliance on the US market.”

The US remains one of the world’s most important markets, and no country, not even Switzerland, can afford to turn its back on it entirely. Some 18% of Swiss exports go to the US. Yet, frustration runs deep in some Swiss political and business quarters, and calls are growing to keep a distance from the US, seen by some as an unreliable partner.

Will US tariffs affect Switzerland’s relationship with the EU? Read our analysis:

At the same time, countries like Switzerland are feeling the impact of the still difficult relationship between the US and China. The two superpowers are engaged in a trade war despite being heavily dependent on each other. This conflictExternal link is leaving its marks: in August 2025 China’s exports to the US dropped by one-third compared with the same period the previous year. Still, the total value of Chinese exports rose by 4.4%, thanks to other markets.

In this situation, smaller countries have to be careful not to get squeezed between China and the US. Cozzi says: “For a small economy, building as many trade bridges as possible is not optional – it is vital. Switzerland has historically understood that openness to global markets is a cornerstone of its prosperity and resilience.”

Business as usual

Other countries are also pursuing stronger market diversification, and so far, most governments continue as usual with jointly negotiated agreements. Despite all the upheavals triggered by US tariffs, the foundations of the global economy remain intact. In an articleExternal link for the Financial Times in early September 2025, director-general of the World Trade Organization (WTO) Ngozi Okonjo-Iweala wrote: “the rest of the world has mostly continued to trade on normal terms”.

“‘Middle powers’ such as Singapore, Switzerland, Uruguay, Australia, the UAE, New Zealand, and the UK see the global trading system as central to their prosperity and are trying to deliver the necessary modernisation,” Okonjo-Iweala added.

In mid-September, Switzerland took a first step into that direction: together with 13 other countries, it launched the Future of Investment and Trade Partnership, an initiative of small and medium-sized countries seeking to develop more diversified trade relations. According to a statementExternal link, members want to “expand their influence in the global economy, strengthen the rules-based trading system and develop solutions to the challenges facing global trade.”

Indeed, Switzerland already enjoys a far wider trade network than many other countries. “Compared with countries of a similar size, Switzerland is unusually active in pursuing market access. With more than 30 trade deals covering over 40 partners, it has built one of the densest global networks of agreements. This international vocation is one of the historic foundations of Switzerland’s development and wealth, and it remains central to its strategy today,” says Cozzi.

Global trade volume has doubled since the turn of the millennium, and Switzerland has strategically aligned itself with existing rules. A “broadly supported, rules-based international order, non-discriminatory access to international markets, and economic relations that contribute to sustainable development in Switzerland and abroad” lie at the heart of its approachExternal link, SECO explains on its website.

Yet the global trading system has never been free of criticism, and the WTO has been gridlocked for years – partly due to protectionism from countries such as the US, and partly from emerging economies pushing for better trading terms. But other factors have also historically shaped global trade flows, such as technological shifts, regulatory requirements, altered supply chains and, of course, geopolitical changes.

“The impact of geopolitical developments are now a top concern for many companies,” writes the World Economic Forum (WEF). The US, for one, is using tariffs as a means of pressure to enforce political demands.

Tariffs on trial

What happens next? US courts have ruled that the tariffs are illegal, but the Trump administration is appealing those rulings, which means they are likely to work their way through the legal system all the way to the Supreme Court. The big question is whether the tariffs will be overturned – an event that SECO expects will not happen.

Another option is to review the legal basis for the tariffs. On April 2, 2025, the so-called “Liberation Day” when the tariff regime was launched, a state of emergency was declared. This gave the US president the power to impose tariffs by decree. This emergency must be reviewed one year later.

By then, however, the world is likely to be a different place.

Edited by Benjamin von Wyl. Adapted from Germany by Billi Bierling/gw