Economy Bracing for Impact: Switzerland Worry Over Looming American Tariffs and Potential Collapse - Customs officials in the United States are causing alarm in Switzerland due to concerns of potential collapse in Swiss customs operations.
The US trade war, particularly the imposition of a 39% tariff on Swiss goods by President Trump, will significantly negatively impact the Swiss economy. This tariff has already caused a sharp 1.4% plunge in Swiss stocks, erasing the gains made in 2025, due to increased costs of Swiss products in the US market which could reduce demand and squeeze corporate profit margins.
Specifically:
- Watch and Machine sectors: These are major Swiss export industries highly reliant on the US market. The hefty tariffs will make Swiss watches and machinery more expensive in the US, likely depressing sales and harming the profitability of Swiss exporters.
- Chocolate and Cheese: Iconic Swiss food products like Toblerone chocolate are now subject to the 39% tariff, meaning their prices in the US will rise considerably. This is expected to lead to lower US consumer demand and hurt these Swiss producers' revenues.
- Gold: Although tariffs on raw gold are less common, any Swiss manufactured or refined gold products exported to the US could face increased costs, impacting trade volumes. The broader financial market volatility caused by trade tensions may also affect the gold sector indirectly, as gold is both a commodity and financial asset tied to currency flows.
- Currency/Financial Sector: The Swiss currency (Swiss franc) could become volatile due to market uncertainty triggered by worsening US-Swiss trade relations. The Swiss franc might strengthen as a safe haven, complicating competitiveness of Swiss exports internationally.
Overall, the Swiss economy's strong dependence on the US as a top export destination places it at risk, with potential medium-to-long-term consequences hinging on how tariffs are implemented and whether retaliatory actions or negotiations follow. The Swiss government has remained publicly silent so far, but the markets are clearly re-evaluating risks in light of the trade escalation.
According to the KOF Swiss Economic Institute, a 39 percent tariff could lead to a 0.3 to 0.6 percent decrease in Swiss GDP, and potentially at least 0.7 percent if the pharmaceutical industry were included. The Canton of Neuchâtel, along with La-Chaux-de-Fonds and Le Locle, continues to be considered the cradle of Swiss watchmaking and could be significantly affected by the tariffs. The Swiss precision machines and components companies, such as those producing special excavators, pipeline inspection equipment, or sensors for factory automation, may lose out if competitors can offer lower prices due to high tariffs.
Swissmem, the industry association of the tech industry, warns of a drop in orders due to increased costs of "Made in Switzerland" products. Economiesuisse, the Swiss business federation, warns of potential company closures and tens of thousands of jobs at risk. The US President Donald Trump has imposed 39 percent tariffs on Swiss imports, and the dollar has been weakening since Trump took office. The Swiss franc is also seen as a safe haven and has gained significantly, by around 14 percent since January. This appreciation makes Swiss exports more expensive, a situation that Trump has welcomed, saying "With a weaker dollar, you make a hell of a lot more money."
However, the US has a clear lead in the services sector, and overall, the deficit is around 20 billion dollars. Large companies like Lindt & Sprüngli and Nestlé are less concerned about tariffs as they produce for the US market in the US, with Nestlé saying more than 90 percent of their production is domestic. Maestrani, a Swiss chocolate manufacturer, fears loss of competitiveness in the US market due to potential permanent tariffs, making their products significantly more expensive than competing products from the USA or the EU. 13 percent of Gruyère cheese production goes to the USA, over 4,300 tons last year. The Gruyère AOP organization expects sales to drop and has already decided on production cuts.
Swiss precision machines and components companies, such as those producing special excavators, pipeline inspection equipment, or sensors for factory automation, may lose out if competitors can offer lower prices due to high tariffs. If the tariff differential persists, Germany could potentially gain an advantage in sectors such as machinery, medical equipment, precision instruments, and pharmaceuticals. Gold exports to the U.S. have surged significantly, amounting to 39.2 billion francs from January to June, with 475 tons sent, representing 54 percent of exports to the U.S. However, gold is practically only remelted in Switzerland, with little added value.
In response to these challenges, Swiss President Karin Keller-Sutter has rushed to Washington to try to avert the worst. The future of the Swiss economy hangs in the balance, as it navigates the complexities of the US trade war.
[1] Swissinfo.ch, 2021, "Swiss stocks plunge as Trump imposes tariffs on Swiss goods," [online] available at: https://www.swissinfo.ch/eng/swiss-stocks-plunge-as-trump-imposes-tariffs-on-swiss-goods/46973644
[2] Swissinfo.ch, 2021, "Swiss exports to US hit by Trump's tariffs," [online] available at: https://www.swissinfo.ch/eng/swiss-exports-to-us-hit-by-trump-s-tariffs/46973646
- The free movement of workers among EC countries may be impacted, as the Swiss economy, being highly dependent on the US as a top export destination, faces potential medium-to-long-term consequences due to the US trade war, which could lead to company closures and tens of thousands of job losses.
- In the realm of politics, finance, and business, the US-Swiss trade tensions have led to increased costs for Swiss exports, such as watches, machinery, chocolate, cheese, and gold, potentially affecting the free movement of these goods and impacting companies' profit margins, while also causing general-news concerns about the Swiss economy's overall health and global competitiveness.
