The Swiss economy experienced a growth rate of 0.8% in the first quarter of 2025, marking its fastest quarterly expansion in two years. The surge was driven by a rush in exports as Swiss companies sought to avoid the looming U.S. tariffs, particularly on pharmaceuticals, chemicals, watches, and precision instruments. This increase in exports to the U.S. was seen as a strategic move to get shipments out before tariffs, imposed by President Donald Trump’s administration, took effect.
Front-Loading of Exports to the U.S.
According to the State Secretariat for Economic Affairs, exports to the U.S. saw a sharp rise, signaling a possible front-loading effect in anticipation of the tariffs. The result was a significant 0.8% year-on-year growth in Switzerland’s gross domestic product (GDP), well above the country’s long-term average quarterly growth rate. This marked the highest growth since the first quarter of 2023.
U.S. Tariffs and Impact on Swiss Manufacturers
Swiss manufacturers were caught off guard when the U.S. announced 31% tariffs on imports from Switzerland in April. The tariffs were later temporarily reduced to 10%, but uncertainty continues to loom, with Swiss politicians working to secure a more stable agreement in the coming weeks. Small and mid-sized engineering companies in Switzerland have voiced concerns about the uncertain trade environment. According to Swissmechanic, a leading industry association, foreign customers were hesitant to invest in new machinery, exacerbating the effects of the Swiss franc’s strong appreciation.
Investment Delays and Rising Business Uncertainty
Swissmechanic President Nicola Tettamanti highlighted the delay or cancellation of many orders for machinery and equipment due to the uncertain trade climate. “Everybody is in wait-and-see mode, and that means no orders,” Tettamanti said. The rise in business uncertainty, which mirrors the challenges experienced during the COVID pandemic, is expected to have a significant impact on both the GDP and labor market in the coming months.
Purchasing Managers’ Index Decline
The Swiss Purchasing Managers’ Index (PMI) also saw a sharp decline, falling by 3.7 points to 42.1 in May, the lowest level since May 2023. With a PMI below the critical growth threshold of 50 points, this suggests that business sentiment is weakening and growth may slow in the near future.
