One of Donald Trump’s highest tariffs is now in effect on Switzerland after the government failed in its last-ditch effort to get the US president to lower the rate. The 39% surcharge on exports – from Swiss-made luxury watches to Nespresso coffee capsules – is the highest among developed countries and compares with just 15% on the neighbouring European Union.
High tariffs could have a significant effect on Switzerland’s luxury watch industry
The punitive tariff applies to all products loaded onto a vessel for transport to the US after 12:01 a.m. New York time on Thursday — 6:01 a.m. in Zurich — according to guidance issued by US Customs and Border Protection. Pharmaceuticals and gold are so far exempt.
It went into force after Swiss President Karin Keller-Sutter wasn’t able to secure a revised deal before the deadline set by Trump. She took a two-day emergency trip to Washington on Tuesday and Wednesday in an attempt to sway her US counterpart, but failed to meet Trump, instead only talking to Secretary of State Marco Rubio, who’s department doesn’t lead trade negotiations for bilateral deals.
The Swiss government plane is scheduled to land in Bern at about 7:20 a.m. local time. The tariff level stunned the Swiss after negotiations that they thought looked promising.
But things came to a head late last week when Trump threw out a negotiated framework deal on a call with Keller-Sutter. He was particularly irked by Switzerland’s bilateral trade surplus with the US of about $38.5 billion last year.
The problem faced by the Swiss president — who also is finance minister — is that any concessions are likely to be politically costly at home without meaningfully curbing the trade gap. Switzerland’s key exports include gold, pharmaceuticals, watches and medical devices and the driving forces behind the deficit mean a quick reduction is unlikely.
If the 39% rate comes into effect across the board — including on pharmaceuticals — that would put up to 1% of Switzerland’s economic output at risk over the medium term, according to Bloomberg Economics. Switzerland is home to pharma giants Novartis AG and Roche Holding AG.
Trump has said on Tuesday that he’ll announce tariffs on pharmaceutical imports “within the next week or so,” adding that levies would eventually go to as high as 250%.
