Swiss president flies to U.S. to win reprieve from Trump's tariffs

By John Revill

ZURICH (Reuters) -Swiss President Karin Keller-Sutter and Business Minister Guy Parmelin flew to Washington on Tuesday, the government said, in a last-ditch effort to avoid the 39% tariffs announced by President Donald Trump on exports to the United States.

The U.S. tariffs, hiked from the initial 31% rate announced in April, have sent Switzerland reeling after they were announced on Friday.

The higher duty is due to take effect on Thursday.

During their visit, Keller-Sutter and Parmelin will "facilitate meetings with the US authorities at short notice and hold talks with a view to improving the tariff situation for Switzerland", the government said.

It did not comment on which parts of the U.S. government they would meet in Washington or whether a meeting was scheduled with Trump.

A person familiar with the Trump administration's thinking, said they were confident that a deal could be worked out with Switzerland if it responded quickly with a better offer.

"There was some kind of bad interaction, but that can blow over, if the Swiss come with a meaningful offer," the source said, referring to a phone call between Trump and Keller-Sutter on Thursday evening.

"It is a large trade deficit, especially in per capita terms," the source added.

Trump referred to the conversation with Keller-Sutter in an interview with CNBC on Tuesday, adding he was concerned about the U.S. trade deficit with Switzerland.

"Look, I did something with Switzerland the other day," he said referring to his phone call with Keller-Sutter. "The woman was nice, but she didn't want to listen, and they paid essentially no tariffs," he told the broadcaster.

"And I said, we have a $41 billion deficit with you, madam....and you want to pay 1% tariffs. I said, you're not going to pay 1%, we lose, because I view deficit as loss."

EMERGENCY MEETING

The Swiss government held an emergency meeting on Monday to decide its response to the tariff hike, and said it was ready to make a "more attractive offer" to the United States.

It was also ready to pursue negotiations beyond the August 7 deadline.

Bern gave no details of what extra incentives could be offered to secure a better deal, but it did say it was not considering any countermeasures against the U.S.

Parmelin has previously said that Switzerland buying more U.S liquefied natural gas (LNG) was under consideration, while further investment by Switzerland in the United States could also be an option.

The aim of Keller-Sutter and Parmelin's trip was to present "a more attractive offer to the United States in a bid to lower the level of reciprocal tariffs for Swiss exports, taking U.S. concerns into account," the government said on Tuesday.

Some Swiss business leaders, including Nick Hayek, CEO of watchmaker Swatch Group, had called on Keller-Sutter to visit Washington to do a deal with Trump directly.

A trade barrier of 39% would be a major blow for the export-orientated Swiss economy by reducing access to its biggest overseas market for its watches, machinery and chocolate, economists have warned.

Hans Gersbach, an economist at KOF Swiss Economic Institute at ETH, a University in Zurich, said the Swiss delegation would have to make a substantial offer to win a reprieve from the 39% tariff, with the visit representing a last-ditch effort to negotiate down the import duty.

"Something marginal won't be enough – it has to be a significant number, which Trump can present to his supporters as a victory for his negotiations," said Gersbach.

"It's crucial Keller-Sutter and Parmelin meet Trump and speak with him directly. He is the decision-maker," added Gersbach, who thought there was reasonable chance of success.

The Swiss government knew how serious the situation is, and was putting all its efforts into getting a deal, he said.

"A 39% tariff on Switzerland, especially with the EU agreeing a rate of 15%, would be an immediate shock to the Swiss economy," said Gersbach.

(Writing by John Revill, additional reporting by Madeline Chambers, Andrea Shalal and Bhargav Acharya, Editing by Miranda Murray and Giles Elgood)