Switzerland Today
Dear Swiss Abroad,
Tariff panic has gripped Switzerland after American President Donald Trump's decision to impose tariffs of 39% on Swiss exports to the US.
From revelations about Trump's ‘disastrous’ meeting with President Karin Keller-Sutter to the Federal Council's willingness to continue negotiations, there is little room for anything else in the Swiss newspapers today.
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A whopping 39% tariff on Swiss exports to the United States was announced by American President Donald Trump following talks with Swiss President Karin Keller-Sutter. A phone call that the Sunday newspapers dissected and which the whole of Switzerland is now discussing..
According to SonntagsZeitung and SonntagsBlick, the call began politely, but then Trump harshly criticised the trade deficit with Switzerland, judging the proposal for 10% tariffs envisaged in a declaration of intent reached between a Swiss delegation and representatives of the US administration to be insufficient. All that was missing was Trump’s signature.
But in those 30 minutes on the phone something went wrong. Trump reportedly asked for “significant concessions”, implying that for a “very rich country” like Switzerland there would be no agreement without new perks. Keller-Sutter would have tried to explain the causes of the trade imbalance and to defend the technical agreement reached in the previous months. According to reconstructions, Trump reacted with growing irritation, branding the Swiss president’s tone as “pedantic”. Trump’s entourage even sent an SMS to the director of the Secretary of State for Economic Affairs, Helene Budliger Artieda, suggesting that the call be terminated. The conversation would have been interrupted a few minutes later.
The Swiss stock market opened lower – though not as much as feared – on Monday following Donald Trump’s announcement of the 39% tariffs he intends to impose on Switzerland. The measure hits key sectors of the Swiss economy hard, in particular watches, chocolate and jewellery.
Chocolate makers such as Lindt and Barry Callebaut opened in the red with losses of 1.5% and 2.9%, respectively. Companies in the sector risk a sharp erosion of margins, aggravated by a strong Swiss franc.
The watch industry is also vulnerable: the US accounts for 15% of turnover and there are fears of a 20% drop in volumes. Swatch and Richemont recorded significant declines. Swatch CEO Nick Hayek urged President Karin Keller-Sutter to travel to Washington to negotiate a more favourable trade agreement with Trump.
The pharmaceutical sector, along with Roche and Novartis, has been relatively spared on the stock market so far thanks to U.S. reliance on medical exports, but remains under pressure from Washington’s demand to reduce prices.
According to analysts, tariffs could reduce Swiss GDP by 0.6% as early as 2025, putting the projected growth of 1.3% at risk. Tens of thousands of jobs are at risk after Trump’s decision, says Urs Furrer, director of the Swiss Association of Arts and Crafts (USAM). “If these customs duties come into force on Thursday, there will not only be an increase in partial unemployment, but a general increase in unemployment,” he told news agency Keystone-SDA.
Technically, Switzerland still has until August 7 to find a solution to the problem of US tariffs, the day on which they should come into force. How to do it? In the Swiss press, there is speculation that a solution could come through gold trading.
Although it does not make sense from an economic point of view, according to specialists, the reason for Trump’s discontent seems to be the fact that the trade balance between Switzerland and the United States is tilted in favor of the Confederation. Gold in particular weighs heavily, according to the newspapers of the Tamedia group. The precious metal could be a solution, they write.
The United States buys gold mainly in the United Kingdom, but this is largely refined in Switzerland, a country that then ships the precious metal directly to the American buyer, finding itself charged the export value, explain the Tamedia publications.
Radical Liberal Party parliamentarian Hars-Peter Portmann proposes to send the refined golf back to the UK. It would then be up to them to get it to the United States, “operations that would make everything more expensive for overseas customers, but at least gold would no longer appear in our trade balance“.
Another possibility conjured up by the newspapers to circumvent the gold problem is to have its sale passed through the banks. In this way, it would become a capital shift and would no longer weigh on Swiss exports to the United States.
For now, the Swiss government wants to continue negotiations rather than take countermeasures to prevent the 39% US tariffs from coming into effect. However, according to Cédric Dupont, professor of international relations and political science at the IHEID in Geneva, Switzerland has little room for manoeuvre.
Negotiations with Washington will continue, the government said in a statement released after an extraordinary session on Monday. The governing Federal Council “remains in close contact with the affected sectors of the Swiss economy and with US officials. Switzerland is committed to securing fair treatment compared with its key competitors to safeguard favourable conditions for its economy,” the statement said.
However, “little Switzerland doesn’t have much to put on the table to satisfy the ogre,” Dupont told RTS. “Buying liquefied natural gas [as Economics Minister Guy Parmelin suggested on Saturday], talking about gold or strategic stocks are just vague attempts that won’t work with the Trump administration.”
“We cannot even promise 200 billion in investments over four years when today we are hovering around 20. It is neither feasible nor desirable, especially with such an unpredictable partner,” he adds. According to the expert, the solution is to start thinking about diversification so as not to remain so dependent on one country or one sector.
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