US Agrees to Cut Swiss Tariffs to 15% After Investment Pledge
(Bloomberg) — The US and Switzerland reached a preliminary trade agreement to lower tariffs on many Swiss goods including watches from 39% to 15%, in a measure of relief for the country’s beleaguered exporters.
The pending deal brings respite to Switzerland, which was hit by the highest levy the Trump administration imposed on any developed country. US Trade Representative Jamieson Greer announced the deal earlier in a television interview.
Swiss officials had been engaged in intense diplomacy since the higher rate was announced in August, pushing to get a better deal. Bloomberg News reported on Monday that Switzerland and the US were moving close to a 15% rate.
In exchange, companies from Switzerland and Liechtenstein have committed to investing $200 billion over the next five years — including $67 billion in 2026 — to create manufacturing and research and development jobs, according to a White House fact sheet.
The White House said the investments would create jobs in a number of sectors, including pharmaceuticals, machinery, medical devices, gold manufacturing, aerospace, and energy infrastructure.
The tariff rate on pharmaceutical goods and semiconductors will also be capped at 15% if Trump seeks to impose additional sectoral levies.
Switzerland and Liechtenstein also intend to remove a range of tariffs across the agricultural and industrial sectors, according to the White House, including on fresh and dried nuts, fish and seafood, certain fruits, chemicals, and spirits such as whiskey and rum.
Swiss Economy Minister Guy Parmelin spoke to reporters in the capital Bern to explain the agreement, stressing that the previous tariff affected about 40% of its exports but that the country “has not made any concessions which would threaten its neutrality or independence.”
By securing a tariff that matches the levy on the EU, Swiss exporters have put themselves at parity with rivals in the trading bloc. However, it doesn’t give them an advantage over European competitors that don’t have to contend with a strong franc, which earlier Friday climbed to a decade high against the euro.
Customers in Switzerland also intend to purchase US-made Boeing Co. planes, said Swiss chief negotiator Helene Budliger Artieda.
Roche Holding AG and Novartis AG have pledged to invest more than $70 billion in manufacturing and R&D in the US in the coming years, but it’s not yet clear where the remainder will come from.
“The Swiss government cannot oblige companies to make investments,” Budliger Artieda said, adding that the investment commitments in the deal “aren’t legally binding.”
Like gold and semiconductors, pharmaceuticals remain exempt from the tariffs for now. Both Roche and Novartis are in talks with the White House over ways to lower drug prices and avoid potential future duties, following recent deals by Pfizer Inc., AstraZeneca Plc and others.
Under the deal, Switzerland will also grant the US duty-free bilateral tariff quotas on 500 tonnes of beef, 1,000 tonnes of bison meat and 1,500 tonnes of poultry meat in a rare softening of its agricultural trade barriers. Given the strong Swiss farmers’ lobby, such a move will likely be politically controversial.
Shuttle Diplomacy
Negotiations to hammer out the framework are to start immediately with a goal of concluding them by the first quarter of next year, the White House said in a statement. The White House also said the Swiss would continue to refrain from imposing a digital services tax, in what would effectively bar them from more extensively taxing the revenue streams of big US tech firms.
The trade agreement detailed Friday is the capstone of months of shuttle diplomacy by Swiss government officials and business figures, after the countries’ key industries, including watches, machinery and precision instruments, were punished by the crippling US tariff.
Greer earlier Friday said that Switzerland is “going to send a lot of manufacturing here to the United States.”
Swiss manufacturers, along with food and chemicals exports, have been the hardest hit by the 39% levy, according to Switzerland’s central bank.
The breakthrough ends a months-long dispute that began in August, when Trump imposed the 39% tariff on Swiss exports, more than double the rate applied to the EU. The move, which the Trump administration justified as a response to what officials described as a $40 billion goods trade deficit, stunned Swiss officials, who believed they had previously agreed on a deal with US counterparts.
A surge in gold exports helped blow out Switzerland’s trade surplus with the US at a sensitive time. Bullion exports of more than $36 billion made up over two-thirds of the US deficit with the Swiss in the first quarter, driven by a tariff arbitrage trade.
Switzerland, the central hub of the world’s gold refining industry, offered to invest in the sector in the US earlier this year, in a bid to improve its tariff settlement, Bloomberg reported in September.
Momentum shifted this month, when a group of Swiss billionaire executives met Trump in the White House in what was described as a friendly atmosphere. That was in sharp contrast to a heated phone call that took place between the US president and his Swiss counterpart Karin Keller-Sutter before the August crisis emerged.
Absent President
The Swiss president has been absent from much of the talks in recent weeks. Instead, Parmelin, who takes over the rotating presidency on Jan. 1 from Keller-Sutter, and Budliger Artieda, have led the Swiss delegations.
The pair fielded questions from reporters in Bern on Friday with no sign of the Swiss president who has six weeks left in office.
–With assistance from Fabienne Kinzelmann, Levin Stamm, Allegra Catelli, Jan-Henrik Förster and Fergal O’Brien.
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