Switzerland Slammed With 39% Tariff Rate in US Trade Blitz

(Bloomberg) — Donald Trump will impose a 39% tariff on imports from Switzerland, one of the steepest levies globally which threaten to leave the country’s key exports reeling.

The outcome — detailed in an executive order Thursday — is higher than the 31% tariff rate Trump had threatened to levy in April and dashes hopes that the country would secure a more favorable deal.

The Swiss government expressed its “great regret,” pointing out that the new tariff rate differs “significantly” from a draft framework the countries had been negotiating.

Bern’s trade negotiators were caught unawares by the announcement since they had received encouraging signals from several senior US officials, according to a person familiar with their thinking. They plan to continue negotiating with the US and they still hope to agree to lower levies, the person added.

US Tariff Hikes

In a post on X, President and Finance Minister Karin Keller-Sutter said she had a final conversation with Trump before the deadline and the trade deficit remains “at the center of US concerns.” The Swiss government said it “continues to seek a negotiated solution.”

The franc was among the worst performing major currencies on Friday, sliding 0.2% against the dollar. Still, it remains more than 8% stronger than it was before the initial April 2 tariff announcement.

For Swiss chocolatiers including Lindt and watch makers like Swatch Group and Rolex SA, the steeper levies threaten to weigh on sales in the world’s largest consumer market. Pharmaceuticals accounted for almost half of Swiss goods exports to America in 2024, according to data compiled by Bloomberg Economics.

The Swiss economy rests on large contributions from industry giants Novartis AG and Roche Holding AG. Drugmakers face a double squeeze as Trump escalates his campaign to pressure them for lower prices, sending letters to 17 of the world’s largest pharma companies demanding they charge the US what other countries pay for new medicines.

Swissmechanic, an industry lobby group, called the 39% rate “dangerous.” It urged the government to negotiate in the narrow window till the tariffs are set to come into effect on Aug. 7, which otherwise risks leaving the economy becoming “one of the few countries that permanently struggle with structural competitive disadvantages.”

Technology manufacturing lobby Swissmem highlighted that Switzerland earns every second franc from foreign trade.

“I am stunned — these tariffs are completely irrational and arbitrary,” Swissmem chief Stefan Brupbacher said. “This decision jeopardizes tens of thousands of jobs in the industry.”

The rate on Swiss exports to the US is markedly higher than other trading partners who were able to negotiate frameworks with the US. The European Union, Japan and South Korea all landed on 15% levies.

What Bloomberg Economics Says…

“The seven-day window for the new tariffs to be implemented provides time for additional negotiations for those interested in reducing reciprocal or sectoral rates — Switzerland, India, Taiwan might still be working on those talks.”

—Maeva Cousin, senior economist. For full global react, click here

Trump in his second term has carried out a sweeping tariff agenda aimed at pressuring countries and industries to reshore manufacturing in the US and to reduce global trade imbalances. The US had a $38 billion trade deficit with Switzerland last year, just outside a ranking of top 10 trade shortfalls.

Trump’s tariff rate comes despite months of high-stakes diplomacy intended to complete an agreement, negotiations that forced Bern to balance its commitment to global openness against the protection of domestic agriculture. The industry represents less than 1% of the economy but commands out-sized political influence, and farmers’ lobbyists had threatened to fight any settlement affecting Swiss high-tariff barriers in the area.

Switzerland might not have been able to offer the US the concessions other countries were able to provide. It already had unilaterally scrapped industrial tariffs. Suggesting lower import rates for American citrus fruits, nuts and shellfish — plus simplified approval for medical devices — may not have been tempting enough.

Trump’s April 2 tariff announcement had put Switzerland’s exporters in a double bind as it also caused a sharp Swiss franc appreciation. That prompted the Swiss National Bank to cut interest rates to zero after it had previously signaled it was done with easing.

–With assistance from Levin Stamm, David Goodman, Malcolm Scott and Ramsey Al-Rikabi.

(Updates with plan going forward in fourth paragraph.)

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