As part of his “Liberation Day” speech, US President Donald Trump confirmed that a 31 percent tariff would be placed on Switzerland. Here’s what the news means for companies and the wider economy, why Switzerland is being hit so hard and what the government plans to do in response.
In a speech on April 2, Donald Trump announced that the United States would be imposing tariffs on every country in the world. From April 5, all imports to the US will be charged a tariff of 10 percent, and on April 9, so-called “reciprocal tariffs” will be introduced on the 60 “worst offender” countries. A 25 percent tariff will also be charged on all non-American-made vehicles.
Trump argued that his plan would “make America wealthy again” and that in the past 50 years the US had been "looted, pillaged, raped and plundered by nations near and far, both friend and foe alike". In his view, by subsidising global defence and supporting the globalisation of trade, America has lost its competitive, economic and manufacturing edge - in short, he sees the tariffs as a way of calling the world’s tab.
In the speech, it was confirmed that Switzerland was one of the “worst offender” countries, and would therefore be charged a higher tariff by the US. Here’s what that means:
From April 9, all the goods Switzerland exports to the United States will face a tariff of 31 percent. This is more than the rate for European Union countries (20 percent) and the United Kingdom (10 percent), but less than for places like Vietnam (32 percent), China (54 percent) and Sri Lanka (44 percent).
However, just hours after the announcement in the official executive order, Switzerland was listed with a different tariff of 32 percent. It is yet to be revealed which figure is correct.
Trump accuses Switzerland of imposing a 61 percent tariff on American goods, via what he thinks is a combination of tariffs, unfair business practices, currency manipulation, value added taxes and safety and sustainability regulations. However how this figure is calculated is at best unclear and at worst fabricated.
For example, as it stands Switzerland has no industrial tariffs on American goods, and while the government does charge VAT, the tax is applied to items produced everywhere, not just the US.
SRF business editors Lucia Theiler and Damian Rast theorised that the US government may be referring to agricultural tariffs, though they only average 32 percent. Others have speculated that the metric is simply determined by the balance of trade between countries. Nevertheless, Economist Paul Krugman wrote in a blog post that the numbers do not add up and that Trump has “gone crazy”.
The 31 percent tariff is expected to have a profound and damaging effect on the Swiss economy. Almost a fifth of all exported goods from Switzerland found themselves in the United States last year, totalling 53 billion francs. The alpine nation, through banks and insurance, also provides the US with services worth 28 billion francs a year. It’s by no means a one-way street: people in Switzerland import 14 billion francs of goods and 50 billion francs of services from the US every year.
If an extra 31 percent tariff is charged, Swiss companies will either be forced to raise their prices for customers, which will likely lead to a drop in sales, or be forced to relocate their manufacturing to the United States.
The one bright spot is that pharmaceuticals and medicines, which account for half of Swiss exports to the US, are not part of the 31 percent tariff. However, Trump has warned that import duties on these goods are in the pipeline.
In response, Finance Minister and President of Switzerland Karin Keller-Sutter (FDP) wrote on X that the government acknowledged the new tariffs. “[We] will quickly determine the next steps. The country's long-term economic interests are paramount. Adherence to international law and free trade remain core values.”
Speaking to the Tages-Anzeiger, State Secretary Helene Budliger, who visited Washington two weeks ago to try and broker a deal, said that it is unlikely that Switzerland will respond with tariffs of its own. She argued that given the size of the country, these measures would “not even be a mosquito bite for the US” and is “not the way to shape our relations”.
Keller-Sutter and Economics Minister Guy Parmelin (SVP) will use a meeting of the World Bank in Washington at the end of April to try and reach a deal with the Trump administration. In a statement, the business organisation Economiesuisse argued that an accord is likely, given that Switzerland and its companies invest the sixth-largest amount of money in America in the world every year.
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