United States and Switzerland hurriedly negotiate a trade agreement, confronting potential economic harm resulting from tariffs
The Swiss government is making a renewed effort to address US concerns in its trade negotiations, aiming to avoid the imposition of high tariffs on Swiss imports that would significantly harm Switzerland's export-driven economy.
After an emergency meeting, the Swiss government announced a "more attractive offer" to the United States, reaffirming its commitment to ongoing dialogue with Washington and seeking fair trade treatment compared to competitors. However, specific details about the contents of this new offer remain undisclosed, with the government only stating that it takes U.S. concerns into account to ease the tariffs situation.
The U.S. decision to impose these tariffs is part of President Donald Trump's broader effort to restructure global trade, targeting countries with large trade surpluses with the U.S. Despite Switzerland having unilaterally eliminated tariffs on industrial goods in 2024 and allowing over 99% of U.S. goods to enter tariff-free, its trade surplus with the U.S. prompted this tariff threat.
The Swiss government emphasizes that its surplus is not due to unfair practices and is seeking fair negotiations to prevent harm to sectors like medicines, watches, machinery, and chocolate that rely heavily on the U.S. market. If the pharmaceutical sector is included, the tariffs could reduce Switzerland's GDP by more than 0.7%.
The tariffs, which come into effect on Thursday, are estimated to affect around 60% of Swiss exports to the United States, its largest market. The White House justified its decision to impose tariffs by accusing Switzerland of not making "meaningful concessions" on the issue of removing trade barriers.
Swiss President Karin Keller-Sutter stated that President Trump is "very focused on the trade deficit". The Swiss government has not yet disclosed whether President Keller-Sutter will travel to Washington for direct talks.
Meanwhile, the Swiss franc was the worst performer against the dollar, rising 0.4% to CHF0.8073, nearing a one-month high. The main Swiss stock index (.SSMI) fell 0.4% on Monday, bucking the positive trend in Europe. Shares of luxury watch companies such as Richemont and Swatch fell amid volatile trading.
The European Union, Japan, and South Korea, all with larger trade surpluses with Washington, have negotiated tariffs of no more than 15%. The US decision to impose tariffs on Swiss imports has angered Switzerland due to perceived discrimination. Long-term disruptions could reduce GDP by more than 1%.
However, Swiss Economy Minister Guy Parmelin hinted at reviewing the government's offer, discussing options such as buying US liquefied natural gas and increasing Swiss investments in the US. The Swiss government did not disclose the details of the offer and stressed that it is not currently considering countermeasures.
In response to the perceived discrimination and to protect crucial sectors, the Swiss government is seeking fair negotiations with the United States concerning their exports, such as medicines, watches, machinery, and chocolate, which heavily depend on the U.S. market. The Swiss government is also considering potential investments in the U.S., particularly in liquefied natural gas, as a way to address the ongoing tariff issue.
