Swiss Push Talks With Trump on 39% Tariff, Not Retaliation

(Bloomberg) — Swiss leaders refrained from implementing countermeasures against sweeping US tariffs and instead want to focus on further talks to find a solution with Donald Trump’s administration.

The 39% surcharge that kicked in on Thursday is the biggest among developed countries and compares with just 15% on the neighboring European Union. So far, a glimmer of hope for the Swiss is that key export goods including pharmaceuticals and gold are exempt, which brings the average rate below 25%, according to Bloomberg Economics.

The government “remains firmly committed to pursuing discussions with the US with the aim of reducing these tariffs as swiftly as possible,” it said in a statement after an emergency meeting.

“For the affected companies this is an exceptionally difficult situation,” President Karin Keller-Sutter told reporters in the capital Bern, but added that “Switzerland has weathered other storms before.”

On Thursday morning the politician returned empty-handed from Washington, where she had sought to sway Trump by making an emergency trip — but instead found humiliation as she was denied a meeting with her counterpart. Instead, she talked to Secretary of State Marco Rubio, whose department doesn’t lead trade negotiations for bilateral deals.

Keller-Sutter said that she had presented an improved offer and that Swiss negotiators stayed in Washington attempting to get a deal. She declined to give details of the proposal.

“At present, tariff countermeasures in response to the US tariff increases aren’t being considered, as they would impose additional costs on the Swiss economy,” the government said, reiterating an earlier stance.

The cooperative stance clashes with a cross-party push by Swiss politicians on Thursday to cancel a long-standing order for three dozen F-35A fighter jets from US defense conglomerate Lockheed Martin Corp. in response to the tariffs. Keller-Sutter rejected the calls, saying that Switzerland stands by the purchase.

With everything from Swiss-made luxury watches to Nespresso coffee capsules under the new levy, the stakes for Swiss companies, which are big players in the US market, are high. In a call on July 31, Trump had spurned a pre-negotiated agreement — which had made the Swiss feel hopeful — and instead implemented a duty that exceeded all expectations.

As recently as July 4, the Swiss government had no indication there would be any problems to prevent the deal going ahead, said Swiss Vice President and Economy Minister Guy Parmelin, who spoke alongside Keller-Sutter.

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 Jean Dalbard of Bloomberg Economics. Switzerland is home to pharma giants Novartis AG and Roche Holding AG.

–With assistance from Hugo Miller and Paula Doenecke.

(Updates throughout with further details.)

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