Switzerland is facing a significant threat to its economy and diplomatic relations after the US announced plans to impose 39% tariffs on goods imported from the country, starting August 7. The looming duties have caused concerns about the Swiss economy, industry, and interest rate outlook.
Swiss leaders traveled to Washington D.C. this week in an attempt to strike a deal with the US administration to avoid the hefty duties. However, US President Donald Trump said that Switzerland’s President Karin Keller-Sutter “didn’t want to listen” to his concerns about the US trade deficit with Switzerland.
The 39% tariff rate is one of the highest imposed by the US in recent times, and it has sparked concerns among Swiss companies and policymakers. The Swiss National Bank has already taken steps to mitigate the impact of the tariffs by reducing its key interest rate to 0% in June.
While pharmaceutical products are exempt from the tariffs, their impact on economic growth is still uncertain. Experts estimate that the tariff could reduce GDP by around 0.6% in the medium term, but it is not catastrophic.
The surging value of the Swiss franc has also added to Switzerland’s economic woes. The currency has gained around 11% against the US dollar since the beginning of the year, weighing on inflation and prompting the Swiss National Bank to intervene in the foreign exchange market.
Swiss policymakers are now facing a “triple blow” of problems, including steep tariffs, a weak USD/CHF currency pair, and a competitive disadvantage compared to neighboring countries. The European Union recently secured a deal with the Trump administration that will see a blanket 15% tariff imposed on goods exported to the US – significantly lower than the rate faced by Switzerland.
The Swiss National Bank is under pressure to respond to the tariffs, and experts warn that negative interest rates may not be effective in cushioning the blow. Instead, policymakers may need to consider engineering currency depreciation to offset the impact of the tariffs.
As the situation unfolds, Swiss officials will need to navigate a complex web of trade agreements, economic policies, and diplomatic relations with the US administration. The fate of Switzerland’s economy and diplomatic relationships hangs in the balance as it seeks to avoid a “triple blow” of problems.
Source: https://www.cnbc.com/2025/08/06/trump-tariffs-why-switzerland-faces-a-unique-struggle.html