A staggering 39% tariff has been imposed on Switzerland, a move considered a profound shock and exceeding worst-case predictions, resulting in the highest tariffs in Europe.
Globally, this places Switzerland fourth-highest, trailing only Syria, Laos, and Myanmar. Should President Trump implement his threatened 50% tariff, Brazil would ascend to the top of the list.
The development has dominated news cycles. One prominent newspaper, Blick, characterized it as the nation’s most significant setback since the French victory at the Battle of Marignano in 1515.
Just weeks prior, the Swiss government projected confidence.
In May, Switzerland facilitated a meeting in Geneva between the U.S. and China, aimed at de-escalating trade tensions. This allowed Swiss President Karin Keller-Sutter to engage with U.S. Trade Secretary Scott Bessent.
Emerging from the meeting, President Keller-Sutter conveyed optimism, suggesting Switzerland was poised to be second only to the United Kingdom in securing a trade agreement with Washington, hinting at a potential 10% tariff offer—substantially lower than the 31% initially proposed by Donald Trump in April.
These expectations have now been dashed. In the hours leading up to the August 1st deadline, a final call between President Keller-Sutter and President Trump proved fruitless. Subsequently, the announcement revealed a punitive tariff of 39%, exceeding the initially threatened 31%.
The rationale behind this decision remains debated. Some Swiss politicians suggest deficiencies in Switzerland’s negotiation strategies, while others argue tactics were either too assertive or overly compliant. A more straightforward explanation might be that Trump prioritized larger-scale deals, and Switzerland’s smaller economy was not a primary focus. The extent of discussions between Swiss and U.S. trade negotiators remains unclear.
The Swiss government now cites the trade deficit with the U.S. as a key point of contention.
President Trump views trade deficits—where a country’s exports to the U.S. exceed its imports—as inherently problematic, a perspective not universally shared by economists. He believes tariffs can safeguard the U.S. manufacturing sector, which has experienced job losses to overseas companies.
Switzerland’s trade deficit with the U.S. amounted to $47.4 billion in 2024. However, factoring in service industries, the deficit decreases to $22 billion. Switzerland’s exports to the U.S. primarily include pharmaceuticals, gold jewelry, watches, and machine tools.
To mitigate this imbalance, the Swiss government reduced tariffs on U.S. industrial goods to zero, and multiple Swiss companies, including Nestlé and Novartis, pledged multi-billion-dollar investments in U.S. facilities. Switzerland is currently the sixth-largest investor in the U.S., purportedly supporting 400,000 U.S. jobs.
However, achieving trade balance appears challenging. With a population of only 9 million, Switzerland’s domestic demand for U.S. products is limited. The large vehicles are impractical for Alpine roads, and U.S. cheese and chocolate are not ideally suited to Swiss palates.
Jan Atteslander, head of foreign trade at EconomieSuisse, stated the need for “reliable relations with the United States,” signaling frustration with the U.S.’s fluctuating trade policies and the resulting uncertainty for Swiss businesses.
Switzerland now faces a critical juncture. A small window of opportunity exists until August 7th, when the tariffs are scheduled to take effect. The Swiss government is expected to intensify negotiations. Swiss businesses warn of potential job losses if the 39% tariff cannot be reduced.
The path forward remains uncertain.
Having already offered significant concessions, including investment pledges and zero tariffs, Switzerland’s options are limited. Potential retaliatory measures could include withdrawing investment offers, implementing reciprocal tariffs, or, as a last resort, canceling the order for U.S. F35 fighter planes.
Across Switzerland, there is confusion and anger.
Friday marks Swiss National Day. Following her traditional address, President Karin Keller-Sutter addressed questions regarding the U.S. tariffs.
She told reporters that while discussions with the U.S. were productive, the trade deficit remained a significant obstacle for President Trump, implying that the U.S. president was the primary issue.
Instead of patriotic celebrations, many Swiss citizens feel penalized for the country’s economic competitiveness and innovation.
Others suggest that the country has previously weathered economic shocks and can leverage its innovation to overcome this challenge.