Swiss Say Firms Can’t Dodge US Tariffs Via Liechtenstein Route

(Bloomberg) — The Swiss government said that companies can’t dodge the 39% tariff the US imposed on the country by routing exports through neighboring Liechtenstein.

Switzerland and the principality of just over 40,000 people have a customs union enabling the free exchange of goods, but the dwarf state was put under US tariffs of 15%, less than half the rate on Swiss goods. That could incentivize exporters to re-route shipments.

Liechtenstein is located on Switzerland’s eastern border and trucks with goods can pass directly from Liechtenstein to Austria in the European Union. Still, the Swiss economy ministry has taken the view that bypassing tariffs this way is not an option.

“For a product to be considered ‘originating from Liechtenstein,’ it must either be wholly produced in Liechtenstein or have undergone sufficient processing there,” a spokesperson told Bloomberg in an emailed statement. “Simply re-exporting Swiss products via Liechtenstein or reloading them there does not change their origin, meaning that the higher US duties on Swiss goods apply.”

The sidestepping opportunity was briefly discussed at a meeting of Swiss President Karin Keller-Sutter and Liechtenstein’s Chief of Government Brigitte Haas this week, but no special handling of the situation was decided, according to a government official familiar with the talks. Swiss authorities so far aren’t aware of any companies trying to use the route, the person said.

“There are fears that sidestepping could be tried, but such shipments will be subject to a 40% tariff,” Haas told Swiss broadcaster SRF after the meeting. “I hardly think anyone would want to bother.”

The US has announced a 40% levy on any product it says was “transshipped” through another country. The aim is primarily to stop goods from China dodging the tariffs.

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