Swiss Economy Faces Uncertainty Over Proposed U.S. Tariff Hike

Swiss flag is pictured at the Harbour in Geneva, Switzerland, March 13, 2024. REUTERS/Denis Balibouse

GENEVA, November 20 (Saudi Arabia Breaking News) – Switzerland has expressed concern over U.S. President-elect Donald Trump’s proposal to impose a 10% across-the-board tariff on imported goods and higher levies on imports from China. The move, part of Trump’s intensified trade agenda, poses potential challenges for Switzerland’s export-driven economy, which relies heavily on the U.S. as its largest market.

Impact on Swiss Exports

The United States accounts for around 20% of Swiss goods exports, surpassing Germany, China, and France as Switzerland’s most significant trading partner. Sectors like pharmaceuticals, machinery, precision instruments, and watches could face substantial disruptions if tariffs are raised. Experts at Zurich’s ETH University estimate that the Swiss economy could shrink by up to 1% if tariffs escalate into a trade war or companies begin relocating to avoid higher costs.

Swiss Government Response

The Swiss State Secretariat for Economic Affairs (SECO) issued a statement rejecting Trump’s tariff plans, citing concerns over their incompatibility with the international rules-based trading system, which is vital for Switzerland’s economy. SECO confirmed it is exploring “sensible responses” and seeking discussions with U.S. authorities and European counterparts, including Germany, France, Italy, and the EU.

“Switzerland clearly rejects the plans,” a SECO spokesperson said, emphasizing the potential damage to economic stability and international trade norms.

Limited Options for Switzerland

Switzerland’s ability to counteract potential U.S. tariffs may be constrained after the country eliminated all industrial tariffs earlier this year. While current U.S. tariffs on Swiss industrial goods are low or duty-free, any new levies could significantly impact Switzerland’s highly specialized export sectors.

Broader Implications

The proposed tariffs have sparked alarm across Europe, with countries like Germany also warning of economic repercussions. Bundesbank President Joachim Nagel noted earlier this month that Germany’s economic output could decline by 1% due to rising trade barriers.

As governments and central banks in Europe monitor the situation, the Swiss government’s approach highlights the challenges smaller, export-reliant economies face in navigating the shifting dynamics of global trade under the Trump administration’s policies.

Switzerland’s next steps, including any retaliatory measures or diplomatic negotiations, will be closely watched as global markets brace for potential disruptions in international trade.