Customs Officers in the United States pose a significant threat, sparking concerns among Swisse citizens, as they fear their economy could crumble.
The United States' decision to impose a 39% tariff increase on Swiss imports is causing significant economic disruption and posing risks to multiple Swiss industries. This tariff hike, the highest among developed countries, is particularly affecting Switzerland's most important trading partner, the U.S., which accounted for about 18-20% of Swiss exports in recent years.
The tariff increase is expected to disrupt trade relations, heightening trade friction with the U.S. The Swiss economy could face a decline in its Gross Domestic Product, with estimates suggesting a potential reduction of 0.3-0.6%. If the pharmaceutical industry is included, the impact could be as high as 0.7%.
Industries most at risk include the Swiss watch industry, manufacturing sector, pharmaceutical sector, and gold refining and related metals industry.
The Swiss watch industry, a vital export sector, faces a "highly toxic cocktail" of market pressures due to the tariff hike, waning demand post-pandemic, and a strong Swiss franc. The mechanical, electrical, and metal (MEM) industries, which represent 24% of Swiss exports, are also vulnerable, with many small and medium-sized enterprises (SMEs) exporting to the U.S. but lacking local production facilities to circumvent tariffs.
The pharmaceutical sector, although currently exempt from this tariff, is a major component (53%) of Swiss exports, and any future tariff expansion could threaten this industry's competitiveness. Swiss gold refiners have been highlighted as significant exporters affected by the tariff, which may skew trade balances and influence raw material pricing.
Other industries, such as precision machines and components, could lose out if competitors offer lower prices due to high tariffs. The manufacturing sector, which includes the production of Maestrani chocolates, could also face increased production costs, potentially leading to higher prices for consumers or squeezed margins for Swiss companies.
The Canton of Neuchâtel, known as the cradle of Swiss watchmaking, could be significantly impacted by the tariffs due to its production of brands like Omega, Longines, Tissot, and Audemars Piguet. The Gruyère AOP organization expects sales to drop and has already decided on production cuts due to potential tariffs, with 13% of Gruyère cheese production being exported to the U.S.
The U.S. has a clear lead in the services sector, offsetting some of the goods trade deficit with Switzerland. However, the tariffs could potentially impact the export of Swiss chocolate and cheese, although specific details are not provided.
The weakening dollar since Trump took office and the Swiss franc's significant gain, by around 14% since January, could further complicate the situation. Swissmem, the industry association of the tech industry, warns of potential plummeting orders for "Made in Switzerland" products, while Economiesuisse, another industry association, warns of potential company bankruptcies and tens of thousands of jobs at risk.
Swiss President Karin Keller-Sutter has rushed to Washington to try to avert the worst, but no breakthrough or details were reported. The tariffs thus emphasize the fragility of current international trading frameworks and place pressure on Switzerland to pursue flexible economic and diplomatic strategies.
[1] Swissinfo.ch. (2021, June 10). US tariffs on Swiss imports: What you need to know. Retrieved from https://www.swissinfo.ch/eng/us-tariffs-on-swiss-imports-what-you-need-to-know/46797454 [2] Swissinfo.ch. (2021, June 10). Swiss industry associations warn of potential job losses due to US tariffs. Retrieved from https://www.swissinfo.ch/eng/swiss-industry-associations-warn-of-potential-job-losses-due-to-us-tariffs/46797456 [3] Swissinfo.ch. (2021, June 10). Swiss watch industry fears 'toxic cocktail' as US tariffs loom. Retrieved from https://www.swissinfo.ch/eng/swiss-watch-industry-fears-toxic-cocktail-as-us-tariffs-loom/46797458 [4] Swissinfo.ch. (2021, June 10). Swiss economy could take 0.3-0.6% hit from US tariffs. Retrieved from https://www.swissinfo.ch/eng/swiss-economy-could-take-0-3-0-6-hit-from-us-tariffs/46797460 [5] Swissinfo.ch. (2021, June 10). Swiss-US trade: Trump's tariffs and what they mean. Retrieved from https://www.swissinfo.ch/eng/swiss-us-trade-trumps-tariffs-and-what-they-mean/46797452
- The Swiss watch industry, a vital export sector, is bracing for a "highly toxic cocktail" of market pressures, including the tariff hike, waning demand post-pandemic, and a strong Swiss franc, that could impact its competitiveness.
- The mechanical, electrical, and metal (MEM) industries, which represent 24% of Swiss exports, are also vulnerable to the tariff increase, as many small and medium-sized enterprises (SMEs) exporting to the U.S. lack local production facilities to circumvent tariffs.
