Switzerland is on edge as a brutal 39% tariff from the United States threatens to slam into its exports in just a few days. The country was blindsided last week when President Donald Trump’s administration announced one of the steepest trade penalties yet.
Most Swiss officials thought they were close to a deal. Reports had said the agreement only needed Trump’s signature. Instead, they got a tariff bombshell.
The Swiss are now stuck trying to fix a situation that changed almost overnight. According to Reuters, some officials believe a heated Thursday phone call between Trump and Swiss President Karin Keller-Sutter may have triggered the move.
Swiss authorities pushed back on that claim.
Swiss leaders scramble as deadline nears
Swiss federal council member Guy Parmelin, who heads the Department of Economic Affairs, Education and Research, said the country was willing to adjust its proposal to the U.S. But he warned that it might be hard to seal a new deal in time.
The Swiss cabinet planned an emergency meeting on Monday to go over the next steps. Across the Atlantic, hopes weren’t looking great either. U.S. Trade Representative Jamieson Greer told CBS News that no one should expect the tariffs to be lowered anytime soon. “These tariff rates are pretty much set,” he said. That pretty much shut down any short-term optimism.
The damage, if no deal is reached, could be massive. Jan Atteslander, from Switzerland’s main business group Economiesuisse, told CNBC, “It was far more than a surprise. We were all shocked.” His warning was blunt: a 39% tariff would be hard to handle. “Such a high rate for many companies will just cut off trade.” He added that although Switzerland had been trying to diversify, “there’s no substitute for the United States.”
Switzerland depends heavily on its exports. The country ships out chemicals, pharmaceuticals, gold, luxury watches, chocolate, and electronics. Without a fix, all of it could suddenly become far more expensive in the U.S. market.
Markets fall and recession fears grow
The announcement hit the Swiss stock market hard. The SMI index was closed on Friday because of a national holiday. But by 8:30 a.m. Monday in London, it opened down 1.2%. Key firms took direct hits. Sika, a chemicals company, dropped 2.1%. Luxury names like Richemont and Roche also slipped by about 1.5%.
It wasn’t just the big players. The Swiss All Share Index was down 1.5% in early trading. UBS analysts said the market damage wouldn’t destroy the economy, but the impact would still be ugly. The worst-hit? Smaller exporters. That includes machinery companies, medtech firms, and especially watchmakers.
There’s also the bigger picture. If there’s no agreement, GianLuigi Mandruzzato from EFG Asset Management says the chance of a Swiss recession just went up. He told CNBC that the U.S. tariffs could hit 10% of Switzerland’s economy.
That’s not small. The added pressure could also fuel deflation and push the Swiss National Bank into a deeper corner. It already slashed rates to zero just to keep the Swiss franc from getting stronger and choking exports further.
The outlook now depends entirely on what happens in the final hours before the deadline. According to Atteslander, the Swiss side is still working on an improved offer. But nothing is guaranteed. “It’s totally open at the moment,” he said.
Mandruzzato got the same mood. “Very hard to tell” was how he put it, when asked if a better deal could happen in time. One possible path? Switzerland could boost purchases of U.S. energy or offer more Swiss investments in the U.S. But even that might not help if Trump simply isn’t interested. “It seems that the trade negotiations with the U.S. eventually boils down to what Donald Trump prefers,” Mandruzzato said.
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