Customs officials in the U.S. are causing worry among Swiss residents, with the concern being a potential collapse of their economy.
Swiss President Karin Keller-Sutter is currently in Washington, attempting to prevent the implementation of 39% tariffs on Swiss imports ordered by US President Donald Trump. These tariffs, if enforced, could have significant negative economic impacts on key Swiss industries such as watchmaking, machinery, chocolate, and pharmaceuticals.
The US is Switzerland's second largest export market, accounting for almost 19% of its total exports. For industries like watchmaking, machinery, and chocolate, the US market is particularly important. Swiss watch brands, including Rolex, Breitling, and Tag Heuer, are popular among the rich in the USA. However, the tariffs could make Swiss goods considerably more expensive in the US market, potentially leading to a sharp drop in export demand.
In the watch industry, mid- and lower-priced Swiss watch brands could be particularly hurt. Smaller independent manufacturers may face severe challenges accepting the increased costs or losing US market share. Similarly, Swiss machinery suppliers, with around 15% of their exports targeting the US, face risks of decreased orders and disrupted business due to less competitive pricing.
The Swiss chocolate and cheese sectors are also affected. Over 13% of Gruyère cheese production goes to the US, and the Gruyère AOP marketing organization expects sales losses and has decided on production cuts. Swiss chocolate specialty manufacturer Maestrani fears a loss of competitiveness in the US market with potential tariff implementation, and their premium chocolates have already become significantly more expensive due to tariffs, costing 40 USD for 100 grams.
The pharmaceutical industry, initially exempt from the tariffs, could face further economic strain if they were extended to this sector. Pharmaceuticals contribute substantially to Swiss exports, so tariffs would pose a major risk.
Economically, the Swiss Economic Research Center at ETH University estimates these tariffs could reduce Swiss GDP by between 0.3% and 0.6%, with a figure up to 0.7% if pharmaceuticals are included. Industry representatives warn of tens of thousands of jobs at risk and potential bankruptcies across sectors.
The canton of Neuchâtel, considered the cradle of Swiss watchmaking, could be significantly impacted by the tariffs. The industry association Swissmem warns of potential collapse of orders due to increased costs of "Made in Switzerland" products, while the industry association Economiesuisse warns of potential company closures and tens of thousands of job losses.
Large companies like Lindt & Sprüngli and Nestlé, which produce for the US market in the US, are less affected by tariffs. However, the weakening dollar since Trump took office and the Swiss franc's subsequent gain have made exports more expensive.
Despite these challenges, Swiss President Karin Keller-Sutter has not commented on the gold or currency problems mentioned in this article. The Kof (Konjunkturforschungsstelle) at the University of ETH Zurich has not updated its GDP prediction in light of the new information about gold exports or the currency problem.
In summary, the 39% US tariffs place Swiss exporters at a severe disadvantage compared to competitors from countries with lower tariffs, likely resulting in major export declines, economic contraction, and employment challenges in key Swiss industries tied to the US market.
The US market, being the second largest for Swiss exports, is crucial for industries such as watchmaking, machinery, chocolate, and pharmaceuticals, with Swiss watch brands facing potential drops in export demand due to increased prices.
The potential implementation of tariffs could make Swiss goods considerably more expensive in the US market, leading to challenges for smaller independent manufacturers in the watch industry and risks of decreased orders for Swiss machinery suppliers, among other sectors.
