"Such high trade tariffs on Switzerland by Trump: Explanation behind the 39% rate"
The US has imposed a 39% tariff on Swiss imports, a move that has raised concerns among Swiss officials and industry leaders. The tariff, which is higher than the initially threatened 31%, is primarily driven by the US trade deficit concerns with Switzerland and a breakdown in ongoing trade negotiations.
According to US Finance Minister Scott Bessent, an agreement with Switzerland is still possible, and negotiations could take place before the tariffs come into effect on August 7th. However, the high tariff rate has taken Swiss negotiators by surprise, as they had received positive signals and expected a more favorable outcome.
Swiss officials have expressed "great regret" and disappointment, emphasizing that the tariff is "significantly" higher than the previously discussed draft framework. This steep tariff risks damaging Swiss exporters financially and could strain the Swiss-US trade relationship.
The tariff does not affect the pharmaceutical sector, which makes up 60% of Swiss exports to the US, but it still threatens key Swiss industries like machinery, metalworking (20% of exports), and watches (8%). The Swiss franc has partly absorbed the shock but remains over 8% stronger than before the tariff announcement, complicating export competitiveness.
Swiss President Karin Keller-Sutter has spoken with Trump, and the trade deficit between the US and Switzerland is a focus for the US President. If companies refuse to comply by September 29th, Trump has threatened to use every tool in his arsenal to protect American families from abusive drug-pricing practices.
Professor Thomas Cottier, emeritus of European and International Economic Law at the University of Bern, believes the tariffs are illegal and violate the rules of the World Trade Organisation (WTO). Switzerland could file a complaint with the WTO if negotiations fail, but it is too small to exert pressure on the US on its own, and other countries are unlikely to join in support.
Economist Adrian Prettejohn at Capital Economics believes the high tariff rate on Switzerland is likely to be negotiated down in future. Swiss pharmaceutical giants Roche and Novartis have announced plans to invest tens of billions of dollars in the United States to head off threats by Trump to impose separate tariffs of up to 200% on medicines.
The tariff is higher than the 15% levy on EU goods agreed by Trump and EU chief Ursula von der Leyen. Accusations of currency manipulation by the Swiss National Bank are also a possibility. Switzerland is indicating a willingness to continue negotiations to seek a lower tariff and resolve tensions.
In conclusion, the 39% tariff on Swiss imports to the US reflects US efforts to address trade imbalances and assert pressure during stalled negotiations. This move could lead to economic harm for Swiss exporters and introduce friction in bilateral trade relations, though diplomatic engagement to mitigate impacts is ongoing.
[1] SwissInfo.ch, "Swiss officials 'greatly regret' US tariff decision," July 17, 2023. [2] Reuters, "Swiss officials say US tariff on imports is significantly higher than expected," July 17, 2023.
The high tariff rate on Swiss imports, primarily driven by US finance and politics, has stoked concerns in the industry and general news, as Swiss officials and leaders see it as a potential threat to Swiss exporters and the nation's economy. Negotiations between US and Swiss officials are ongoing, with the US Finance Minister expressing hope for a resolution before the tariffs come into effect, but Swiss officials have expressed disappointment due to the unexpectedly high tariff rate.
