Switzerland's Bill for Trump's Tariffs
Fears are growing within Swiss industries regarding the potential economic fallout should the United States implement sweeping import tariffs, particularly if Donald Trump returns to the presidency. A proposed universal tariff of 10% on all goods entering the US, and potentially higher rates for specific countries like China, could significantly impact Switzerland's export-driven economy.
Switzerland relies heavily on international trade, and the United States stands as its second-most important trading partner, absorbing around 17% of Swiss exports in recent years. While Swiss exports to the US have actually grown despite previous targeted tariffs under the Trump administration, the prospect of a broad, universal tariff presents a more substantial threat across various sectors.
A study conducted by BAK Economics, commissioned by major industry associations including Swissmem (representing the mechanical and electrical engineering industries), economiesuisse (the Swiss Business Federation), and Scienceindustries (covering chemical, pharma, and biotech sectors), aimed to quantify the potential damage. The findings paint a concerning picture:
The impact wouldn't be confined to direct exports. Swiss companies are deeply integrated into global supply chains. Tariffs could disrupt these chains, increasing costs and administrative burdens even for companies not directly exporting finished goods to the US. The vital chemical and pharmaceutical sector, Switzerland's largest export category to the US, would be heavily affected. Other significant sectors facing headwinds include machinery, electrical engineering, metals (MEM industries), and the renowned watchmaking and jewellery sector.
While larger multinational corporations may have strategies to mitigate some effects, such as diversifying markets or establishing production facilities within the US (as firms like Bucher Industries and Starrag have done partly in response to previous protectionist trends), the situation poses significant challenges. Smaller and medium-sized enterprises (SMEs), which form the backbone of the Swiss economy, are often less equipped to absorb sudden cost increases or navigate complex international trade disputes. The pervasive uncertainty created by potential tariff hikes also hinders investment and planning.
Industry leaders and associations are urging Swiss policymakers to focus on strengthening international trade frameworks. This includes advocating for the reinforcement of the World Trade Organization (WTO) and pursuing bilateral agreements. Efforts to conclude a free trade agreement with the US, which have previously stalled, are seen as increasingly important. Diversifying trade relationships beyond the major economic blocs is also considered a crucial long-term strategy to reduce vulnerability to shocks originating from any single market.
The potential return of broad US protectionism represents a significant economic risk for Switzerland, demanding attention from both businesses and government to prepare for potential disruptions and advocate for stable, predictable international trade relations.
