Bern: Switzerland expressed concern on Tuesday over U.S. President-elect Donald Trump’s proposals to raise tariffs, signaling it is preparing to respond should his administration implement the measures.
Trump has outlined plans to escalate his aggressive trade agenda from his first term, proposing a 10% blanket tariff on imported goods, with even steeper levies on imports from China. This could have serious repercussions for Switzerland’s export-driven economy, where the United States stands as the largest market.
Swiss Economy in the Crosshairs
According to customs data, approximately 20% of Swiss exports head to the United States, surpassing Germany, China, and France as key markets. Industries such as pharmaceuticals, machinery, precision instruments, and luxury watches are particularly vulnerable to higher U.S. tariffs.
A spokesperson for the Swiss State Secretariat for Economic Affairs (SECO) voiced the government’s apprehensions:
“Switzerland is concerned about Donald Trump’s announcement to impose additional tariffs on all goods imported into the U.S.”
The spokesperson emphasized Switzerland’s firm opposition to the proposals, stating:
“Switzerland clearly rejects the plans,” explaining that they violate the rules-based international trading system crucial to the Swiss economy.
Examining Possible Responses
SECO revealed that Switzerland is considering “sensible responses” and engaging with U.S. authorities as well as European counterparts in Germany, France, Italy, and the EU to address the issue. However, no specific countermeasures were disclosed.
Switzerland’s options may be limited after it eliminated industrial tariffs earlier this year. Currently, the U.S. imposes low single-digit tariffs on industrial imports, with many Swiss products enjoying duty-free access.
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Economic Implications
Economists have cautioned that Switzerland could face a 1% reduction in economic output if Trump’s tariffs lead to severe ripple effects, such as a broader trade war or corporate relocations to sidestep higher tariffs.
A report from the Swiss Federal Institute of Technology (ETH) warned that industries like pharmaceuticals, machinery, precision instruments, watches, and foodstuffs would bear the brunt of such a policy.
Broader Global Impact
The potential fallout of Trump’s tariff policies is not confined to Switzerland. German Bundesbank President Joachim Nagel recently warned that Germany’s economic output could also shrink by 1% if the tariff hikes are realized.
With governments and central bankers across Europe voicing concerns, the global economy braces for the potential turbulence caused by rising trade barriers.
