Switzerland is facing one of its most severe trade challenges in decades after the United States implemented a 39 percent tariff on Swiss exports, a rate among the highest imposed under President Donald Trump’s ongoing overhaul of global trade rules. The levy, which took effect on Thursday, targets a wide range of Swiss products, including luxury watches, jewelry, cheese and chocolate, while pharmaceuticals, Switzerland’s largest export to the U.S., remain temporarily exempt.
The decision followed a failed attempt by Swiss President Karin Keller-Sutter to secure a significantly lower 10 percent rate during last-minute negotiations in Washington. The tariff represents a sharp escalation from the 31 percent rate first announced in April and comes despite three months of talks aimed at reaching a compromise. According to sources familiar with the matter, a tense 30-minute call between Trump and Keller-Sutter the previous week made clear that the U.S. president considered 10 percent insufficient.
Swiss officials deny reports that the 39 percent rate was a direct reaction to the call, though they acknowledged that the discussion did not produce positive results. The U.S. trade deficit with Switzerland has been a central factor in Trump’s decision. Official data shows the deficit stood at 38 billion dollars last year and expanded to 48 billion dollars in the first half of 2025, driven largely by gold refining. Switzerland is a global hub for processing gold, with much of it imported from London, refined for U.S. market standards and then shipped across the Atlantic.
Swiss industries warn of severe export losses
This surge in gold exports has fueled the trade gap, alongside strong sales of Swiss pharmaceuticals, machinery and high-end watches. Industry leaders have warned of significant economic damage if the tariffs remain in place for an extended period. Hans Gersbach, an economist at ETH Zürich, estimated that Swiss GDP could shrink by up to 0.6 percent over the next year, potentially pushing the economy toward stagnation. The Swissmem industry association described the situation as a “horror scenario” that could cripple exports to the U.S., while watch industry executives warned that prices would inevitably rise, potentially encouraging American buyers to turn to overseas markets.
The disparity between Switzerland’s tariff rate and those negotiated by other U.S. trading partners has fueled criticism at home. The European Union secured a 15 percent rate and the UK 10 percent. Swiss media outlets described Keller-Sutter’s handling of the negotiations as a political setback, with some calling it the most significant defeat of her career. The government has pledged to continue discussions and indicated that new offers addressing U.S. concerns are being prepared.
Pharmaceutical sector temporarily spared from tariff
Potential concessions under review include increased U.S. investments by Swiss companies, commitments to purchase more American liquefied natural gas and reductions in gold exports. Switzerland has already announced major U.S. investments, including a 50 billion dollar pledge from Roche and 23 billion dollars from Novartis over five years. Officials have also hinted at leveraging recent defense procurement agreements, including the purchase of F-35 fighter jets, as part of future talks.
Despite the immediate shock, Swiss financial markets have shown signs of resilience. The blue-chip stock index rose 0.8 percent on Thursday, reflecting investor optimism that a compromise could still be reached. Nevertheless, Swiss officials acknowledge that the tariffs represent a severe challenge to one of the world’s most export-dependent economies and that resolving the dispute will require substantial diplomatic effort in the weeks ahead. – By Content Syndication Services.