Swiss Cabinet Holds Emergency Session as US Tariffs Kick In

(Bloomberg) — Switzerland’s government will hold an emergency meeting on Thursday to consider the fallout from its failure to avert the highest US tariffs on any developed country.

President Karin Keller-Sutter and the other six members of the cabinet will meet for an extraordinary gathering and will inform the public after that, a spokesman said on X on Thursday.

The 39% surcharge on exports – from Swiss-made luxury watches to Nespresso coffee capsules – is the biggest among developed countries and compares with just 15% on the neighboring European Union.

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US President Donald Trump’s punitive tariff applies to all products loaded onto a vessel for transport to the US after 12:01 a.m. New York time on Thursday — 6:01 a.m. in Zurich — according to guidance issued by US Customs and Border Protection. Pharmaceuticals and gold are so far exempt.

The measure went into force after a last-ditch attempt by Keller-Sutter to secure a deal before the deadline came to naught. Her two-day emergency trip to Washington on Tuesday and Wednesday turned into a humiliation, as she was denied a meeting with Trump and instead only talked to Secretary of State Marco Rubio, whose department doesn’t lead trade negotiations for bilateral deals.

“Switzerland will come up in the next hours hopefully with a strategic action plan how to tackle the huge trade balance,” said Thomas Borer, former Swiss ambassador to Germany, adding that Trump isn’t interested in any other metric. “So we have to tackle this issue.”

Speaking to Bloomberg Television’s Francine Lacqua, he said he doesn’t think the Swiss government will push for countermeasures when it meets this afternoon. The threat of such a step was a tactic used by the EU during its negotiations with America.

Still, politicians across parties on Thursday suggested Switzerland now cancel an order for three dozen F-35A fighter jets from US defense conglomerate Lockheed Martin Corp. in response to the tariffs.

The Swiss franc slid 0.2% against the euro on Thursday, touching the weakest level since June. It fell 0.6% on Wednesday and is down 1.5% this month. It was broadly unchanged against the dollar.

Similarly, Swiss equities traded roughly in-line with the broader European market on Thursday, rising as much as 1%.

“Swiss equities are facing renewed headwinds after the Swiss delegation returned from Washington without securing relief from the newly imposed 39% US tariffs – the highest level applied to any developed economy,” said Mathieu Racheter, head of equity strategy at Julius Baer. “With the duties now officially in effect, Switzerland finds itself isolated as the only developed market without preferential access to the US.”

The country’s technology manufacturer association Swissmem called for urgent measures to support domestic exporters and said that the government should focus on further talks.

“Switzerland must not accept this situation and should continue to negotiate with the US, even if the chances of success currently appear to be slim,” the organization said in a statement.

The tariff level stunned the Swiss after negotiations that they thought looked promising. But things came to a head late last week when Trump threw out a negotiated framework deal on a call with Keller-Sutter. He was particularly irked by Switzerland’s bilateral trade surplus with the US of about $38.5 billion last year.

The problem the Swiss president — who also is finance minister — faced in Washington was that any concessions are likely to be politically costly at home without meaningfully curbing the trade gap. Switzerland’s key exports include gold, pharmaceuticals, watches and medical devices and the driving forces behind the deficit mean a quick reduction is unlikely.

If the 39% rate comes into effect across the board — including on pharmaceuticals — that would put up to 1% of Switzerland’s economic output at risk over the medium term, according to Bloomberg Economics. Switzerland is home to pharma giants Novartis AG and Roche Holding AG.

Trump said on Tuesday that he’ll announce tariffs on pharmaceutical imports “within the next week or so,” adding that levies would eventually go to as high as 250%.

While its unclear what the Swiss may have offered during Keller-Sutter’s Washington trip, pledges to invest in the US has been something that’s helped other countries to secure deals.

Swiss generic-drug maker Sandoz Group AG would need to see “more structural reform in terms of the attractiveness of the market” before it considers investing in US factories, CEO Richard Saynor said, citing framework conditions around patents and the payer framework. The US has lower prices for generic medicines than many other wealthy countries.

“Those are the things that would encourage us to invest,” Saynor told Bloomberg Television.

–With assistance from Alexander Pearson, Naomi Kresge, Kriti Gupta, Valerie Tytel, Oliver Crook, Paula Doenecke, David Goodman and Michael Msika.

(Updates with markets starting in ninth paragraph.)

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