Published by Global Banking & Finance Review®
Posted on August 7, 2025
4 min readLast updated: January 22, 2026
Add as preferred source on GoogleSwitzerland continues negotiations with the US over 39% tariffs impacting its export-driven economy, affecting sectors like watches and cheese.
By John Revill
ZURICH (Reuters) -Switzerland will continue talks with the United States, its president said on Thursday, after President Donald Trump placed crippling import tariffs on Swiss goods, which threaten to inflict serious damage on its export-focused economy.
The 39% import levy - among the highest of any applied under Trump's global trade reset - took effect at midnight Washington time (0400 GMT) after an 11th-hour effort by Swiss officials failed to produce a better deal.
The tariffs are set to throttle the small alpine nation's access to the U.S., a leading export market for Swatch, Rolex and Patek Philippe watches as well as high-end cheeses and chocolates.
The U.S. is also the single largest market for Swiss pharmaceuticals, worth $35 billion last year, produced by companies including Roche and Novartis, though those exports are not currently covered under the 39% rate.
"For the affected sectors, companies, and their employees, this is an extraordinarily difficult situation," President Karin Keller-Sutter told reporters following an urgent meeting of the seven-member Federal Council - Switzerland's governing cabinet.
Keller-Sutter left Washington on Wednesday without a deal following a hastily organised trip during which she did not meet with Trump or any of his leading trade representatives, according to two sources.
Her proposal for a 10% tariff rate was rejected by U.S. officials, one of the sources added.
"We have seen in other cases that President Trump's positions can evolve," said Swiss lawmaker Damien Cottier, chairman of the Swiss-U.S. parliamentary association. "We must continue to negotiate and argue our case, which is a good one."
'INSANELY HIGH' TARIFFS ON SWISS GOODS
Dozens of countries that have failed to strike deals with Washington are facing new tariff rates, which U.S. importers began paying on Thursday.
"BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA," Trump wrote on his social media platform Truth Social.
Switzerland was stunned by Trump's decision last week to apply the steep rate, which is much higher than those negotiated by the European Union, Britain, Japan and South Korea.
Thursday's front page of the daily tabloid Blick was all black with the banner headline "39%".
"This number is insanely high," said Manfred Elsif, director of research at the University of Bern's World Trade Institute. "Trump is simply obsessed with trade deficits in goods and does not understand that his short-sighted actions sour relations with allies."
Switzerland removed tariffs on nearly all imports in 2024, extending virtually free access to its markets for U.S. products.
But Keller-Sutter said last week that Trump was focused on its trade surplus with the United States, which amounted to 38.5 billion Swiss francs ($48 billion) last year.
Industry associations and economists have said the tariffs will inflict major damage on the economy, put jobs at risk and curtail growth. They could also push the Swiss National Bank to cut interest rates next month.
Hans Gersbach, an economist at KOF Swiss Economic Institute at ETH, at Zurich University, estimated that if the levies remain in place for an extended period, it would result in a GDP loss of 0.3% to 0.6% over the next year.
"We will not enter a recession, but we are moving towards stagnation," he said.
Switzerland's private sector urged the government to continue talks with Washington.
"We are completely stunned because the horror scenario becomes reality now. And we fear this means the death of the export business of our industry to the U.S.," Jean-Philippe Kohl, vice director of industry association Swissmem, told Reuters.
Most companies kept a low profile on Thursday, preferring not to comment on the tariffs' expected impact.
"I think this is part of the game, to create chaos and make announcements every day," Zurich Insurance CEO Mario Greco, speaking as the company reported its first-half results, said of Trump's tariff announcements.
The Swiss blue-chip index was, meanwhile, up 0.8% at 1045 GMT, in line with broader markets, after hitting its lowest level since late April on Monday. The franc firmed, leaving the dollar down 0.1% on the day at 0.80605 francs.
"The lack of any drama so far on Swiss markets suggests a hope of some form of deal in the coming weeks," said IG broker Chris Beauchamp.($1 = 0.8047 Swiss francs)
(Additional reporting by Dave Graham, Olivia Le Poidevin, Paolo Laudani and Amanda Cooper; Writing by Joe Bavier; Editing by Alex Richardson, Toby Chopra and Sharon Singleton)
The Swiss National Bank is responsible for the country's monetary policy, including setting interest rates and ensuring price stability.
Export markets are foreign markets where goods and services produced in one country are sold. They are crucial for businesses looking to expand their reach.
GDP loss refers to a decrease in a country's gross domestic product, which can occur due to various factors, including economic downturns or external shocks like tariffs.
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