Switzerland collects Trump's mega-punishment - how did it get this far?

No time? blue News summarizes for you

• From August 7, the USA will impose a punitive tariff of 39 percent on all goods from Switzerland.
• The US government justifies the move with a massive trade deficit - a distorted picture according to Switzerland.
• Luxury goods and machinery are particularly affected - it will be significantly more expensive for US consumers.

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The US government under President Donald Trump is further tightening the screws in the trade conflict - and Switzerland is being targeted. With a new decree signed on July 31, all imports from our country will be subject to a hefty punitive tariff of 39%. The measure comes into force on August 7.

This means that Switzerland will be hit harder than almost any other country - only Syria and Brazil will be asked to pay more.

What does this mean for the Swiss economy? And above all: for my job? blue News sorts it out.

US President Donald Trump announced new punitive tariffs on imports on Friday night - and hit Switzerland particularly hard. Instead of the recently discussed 10 or 15 percent, the US government is now imposing 39 percent on Swiss products. This is the result of a decree published on Thursday.

The tariffs will come into force on August 7. This is the worst-case scenario - one that was considered unlikely in Bern until recently. In an initial statement to SRF, the Federal Council reacted "with great regret" and emphasized that talks with the USA would continue.

The Federal Council then published the following statement in the morning:

"The Federal Council notes with great regret that, despite the progress made in the bilateral talks and Switzerland's very constructive stance from the outset, the US wants to apply unilateral additional tariffs of a substantial amount against imports from Switzerland. The additional tariff mentioned by the US President clearly deviates from the draft of a joint declaration of intent."

And:

"This draft was the result of intensive discussions between Switzerland and the US in recent months and was approved by the Federal Council on July 4, 2025. Switzerland was and is in contact with the responsible authorities in the USA. It continues to strive for a negotiated solution with the USA that is compatible with both the Swiss legal system and existing obligations under international law. The Federal Council will analyze the new situation and decide on how to proceed."

Yes, at 39 percent, Switzerland is well above most industrialized countries. The decree only lists 15 percent for the EU and Norway, 10 percent for the UK and 35 percent for Canada. Even South Korea only has to pay 15 percent.

Switzerland therefore has the fourth highest tariffs in the world. Only Syria (41%), Laos and Myanmar (40% each) and Brazil (50%) are hit harder.

Decree even punishes circumvention attempts

White House publishes list of countries - Switzerland receives almost highest tariff

At the end of May, President Karin Keller-Sutter met US Secretary of the Treasury Scott Bessent in Geneva (archive image).

sda

Some politicians in Bern are probably currently asking themselves this question. After US President Trump announced a punitive tariff of 31% on Swiss goods on April 5 with the "Liberation Day" decree, he lowered the tax rate back to 10% a few days later and gave the affected countries a 90-day deadline to submit compensation for America's trade deficits.

Bern used this time to negotiate a memorandum of understanding with Washington that provided for investments by Swiss companies in the USA and the reduction of Swiss industrial tariffs. The Federal Council approved the draft on July 4, and since then the ball has been in the Americans' court.

But Trump did not accept the paper. In the "last meeting" before the deadline on August 1, President of the Swiss Confederation Karin Keller-Sutter explained via X that it had not been possible to agree on the joint agreement; for Trump, the trade deficit remained the central issue. The US side classified the negative trade in goods of around 38 billion dollars as an "extraordinary threat" to national security and demanded greater concessions.

One thing is clear: Trump's economic policy remains unpredictable - and Switzerland was probably unable to make enough concessions to the president. Despite negotiations, this led to a debacle: Switzerland was prepared to negotiate, but Washington demanded more and let the deadline pass.

Trump justified the move with an alleged trade deficit with Switzerland: according to US statistics, this amounted to around 38.5 billion dollars in 2024.

However, Bern strongly disagrees with this statement. The official figures completely disregard key aspects such as services or license payments, argues the Federal Department of Finance. If, for example, the fact that the USA purchases software and financial services worth CHF 21 billion from Switzerland every year is taken into account, the deficit is clearly put into perspective.

Finance Minister Karin Keller-Sutter spoke of a "mathematical trick" and warned against hasty decisions. The business umbrella organization Swissmem also called for a correction: Switzerland is not a free rider, but one of the most important investors in the USA - with over 500,000 jobs attributable to Swiss companies.

For many Swiss companies, the US market will become a cost trap from August. The watch industry, mechanical engineering and medtech companies will be hit particularly hard. The Swissmechanic association warns: "Many SMEs simply can no longer afford this market access." According to swissinfo.ch, around a third of Swissmem's member companies have already introduced short-time working.

This is also affecting consumers - especially in the US. According to Revolution Watch magazine, a watch worth 10,000 dollars could soon cost up to 13,000 dollars. And because many luxury brands such as Rolex and Patek Philippe are sticking to the "Swiss Made" label, relocating production is out of the question - which would significantly reduce margins.

Matthias Geissbühler, Head of Investment at Raiffeisen Switzerland, calculates on X how badly the new tariffs will hit the export industry: "Companies that produce in Switzerland and export a lot to the USA will be hit hard. In addition to the tariffs, there is also the currency effect (USD -11%). This makes products 50 percent more expensive."

Pharmaceutical products are currently exempt from the tariffs - an important point, as they account for over half of Swiss exports to the US. But the industry remains tense.

Swissmedtech warns that new trade barriers could jeopardize innovation and force start-ups to finance clinical trials outside the USA in future.

The pharmaceutical industry is exempt from the tariffs - for now.

Silas Stein/dpa

In the days leading up to August 7, rumors were circulating about a special agreement for the Swiss pharmaceutical industry. According to insider reports, Bern and Washington were working on an agreement in which the USA would waive customs duties for a segment that is "vital" for Switzerland.

However, President Trump made no mention of such an exception when he announced the country-specific tariffs. Instead, he reiterated that a separate pharmaceutical tariff would be introduced gradually and that this levy would serve as a means of exerting pressure to locate production facilities in the USA.

For the pharmaceutical industry, everything remains the same for the time being. Medicines are explicitly exempt from the 39 percent tariffs on Swiss goods that come into force on August 7. However, Trump is threatening to impose high tariffs of up to 200% if medicines do not become cheaper and some production is relocated to the USA. The situation therefore remains volatile.

The Swiss population will probably not notice much for the time being.

Oliver Berg/dpa

Not in the short term - but in the long term it could well be felt in your wallet. For Swiss households, the tariffs will initially change little; the US levy primarily affects Switzerland as an exporting nation - not local households.

Because tariffs are generally a burden on the importer, prices will rise where they are levied. Wüest Partner points out that import duties "primarily lead to higher prices for consumers in the importing country".

Switzerland has not yet levied any counter-tariffs, which means that most goods do not become directly more expensive here. Only individual intermediate products from the USA could become more expensive, but according to economists, the extent of this is small

In the long term, however, the greatest leverage remains indirect: if the US export market shrinks, companies will have to cut staff and reduce investments - which will affect income and purchasing power in Switzerland. In the event of an extended trade war, the KOF expects GDP to fall by 0.2 to 0.3 percent, which corresponds to around CHF 200 less economic output per capita.

In the worst case scenario, jobs could be lost, companies could cut investments or entire business sectors - and therefore require fewer staff. The conflict could therefore also reach Swiss people's wallets via indirect channels such as these.

The Swiss economy is reacting with alarm. The umbrella organization Economiesuisse calls the measure "unjustified" and warns of a "very serious burden" for Swiss export companies.

The association is calling on the Federal Council to quickly achieve a reduction in customs duties. Switzerland is an important investor in the USA - Swiss companies secure around 400,000 jobs. The bilateral relationship threatens to be permanently damaged by the measure.

Following the announcement of the new US tariff rate of 39 percent,Swissmechanic called on the national government to take decisive action. The association warned of the long-term consequences for small and medium-sized companies in Swiss industry. Switzerland must not become one of the few countries that have to struggle with structural competitive disadvantages in the long term. Swissmechanic therefore demanded a clear line from the national government.

There has also been criticism from politicians - and initial calls for countermeasures. Lisa Mazzone, President of the Green Party, repeated an old demand from the spring: "The Federal Council's ingratiation strategy has failed. It's time to tax big tech companies appropriately." Companies such as Google, Amazon and Netflix should pay ten percent of their digital turnover in Switzerland if the tariffs remain in place.

FDP President Thierry Burkart called the decision a "catastrophe" in an interview with Blick. It is a direct attack on our prosperity. And: "With this action, the USA is sabotaging both the very good and reliable relations with our country that have existed for decades and free trade as a whole", the (still) FDP President continued.

Reactions from the SVP were initially rare. On X (formerly Twitter), Joël Thüring, member of the Basel-Stadt cantonal parliament, blamed the President of the Swiss Confederation Karin Keller-Sutter for the failed deal in sharp tones: "39%! Keller-Sutter is even more incompetent than assumed. A woman is destroying the Swiss economy." Thüring could not be reached for comment by blue News.

Hardly. In the meantime, Switzerland is trying to de-escalate the situation. Federal Councillor Keller-Sutter is relying on quiet diplomacy and has sent a special envoy to Washington. According to various reports, a special team is working behind the scenes to find a solution as quickly as possible.

It remains to be seen whether these efforts will bear fruit before August 7. The watch association is skeptical: it expects a longer phase of uncertainty.