Switzerland is under intense pressure as the deadline to sign a trade deal with the United States approaches. If it fails to do so by August 7, Swiss exports will face tariffs as high as 39%. A rate that has surprised many, given that previous reports suggested a deal was close to being finalized. Tensions have escalated after reports claimed a phone call between Swiss President Karin Keller-Sutter and US President Donald Trump ended without an agreement, something Switzerland has denied.
Switzerland's business community and industry groups have warned that the impact of the tariffs could lead to massive job losses, particularly in key export sectors such as chemicals, pharmaceuticals, watches, jewellery, gold, chocolate and electronics. Economiesuisse's head of international relations, Jan Atteslander, said such high rates risked a complete halt to trade with the US, stressing that there was no comparable substitute market. The Swiss stock market was also hit, with the SMI Index and shares of several major companies opening lower on Monday.
UBS analysts expect the tariffs to have a negative but not devastating impact on the Swiss stock market, with watchmakers, machine builders and small businesses reliant on exports. Meanwhile, EFG Asset Management Chief Economist GianLuigi Mandruzzato warned of rising recession risks as exports to the US account for about 10% of the Swiss economy. The tariffs are also expected to put deflationary pressure on the Swiss National Bank, which has already cut interest rates to zero.
While the Swiss government is working on a new offer to the US, analysts see the prospects for the talks as uncertain. Potential offers include increased US energy purchases or direct investment by Swiss companies in the US. However, market observers say the final outcome will depend on Trump’s wishes, making the direction of the talks difficult to predict.
