Watchmakers and exporters hit hard as pharma gets temporary relief
Swiss manufacturers are reeling from a sharp escalation in U.S. tariffs, with President Donald Trump announcing a 39% duty on Swiss imports — the highest rate imposed in the current wave of trade actions. The Swiss government expressed “disappointment” over the move, which more than doubles the 15% tariff most EU countries face. The policy is expected to affect tens of thousands of jobs, particularly in sectors such as watches, chocolates and engineering products.
The new rate, up from an initially proposed 31%, has sparked alarm among Swiss industry leaders. Swissmem, which represents the country’s mechanical and electrical engineering firms, called the measure “arbitrary” and warned of a major economic shock. “This tariff will hit Swiss industry very hard, especially as our competitors in the EU, Britain and Japan have much lower tariffs,” said deputy director Jean-Philippe Kohl.
Pharma spared for now, but uncertainty remains
Pharmaceutical exports, Switzerland’s top product category to the U.S. valued at $35 billion annually, have been temporarily exempted from the 39% tariff. Industry giants like Roche and Novartis appear safe for the moment, according to Swiss officials. However, Trump has launched a Section 232 national security investigation into the global pharmaceutical sector, raising fears of new tariffs as high as 200%.
Swiss business group Scienceindustries warned that the pharmaceutical supply chain is at risk. “New tariffs would place a heavy burden on these structures, with serious risks to the supply of vital medicines,” the association said. Even without immediate duties, the threat of future levies casts a long shadow over the industry’s U.S. outlook.
Political fallout and failed diplomacy
Swiss President Karin Keller-Sutter, who also serves as finance minister, expressed frustration at the shift from a draft agreement reached in early July. The Swiss government had expected a more favorable outcome based on earlier negotiations in Washington. Switzerland is the seventh-largest investor in the U.S. and had offered limited concessions, noting that American goods already enjoy 99.3% free market access in the country.
“It’s really difficult to give more,” Keller-Sutter said, pointing to significant Swiss investments in the U.S. economy. Despite this, the White House insisted Switzerland had made “no meaningful concessions” and labeled the previous trade balance “one-sided.” Talks are expected to continue after the new tariff takes effect August 7.
Economic outlook weakens amid trade blow
The tariff shock comes as Swiss exports to the U.S. reached 65 billion francs last year, accounting for about 17% of total exports. Watches alone represented 4.4 billion francs, with the U.S. being Switzerland’s largest market. Traders and business owners say absorbing a 39% tariff is not feasible, especially for luxury goods. “This is getting out of hand,” said Shahzaib Khan, who runs two Swiss watch businesses abroad.
UBS Global Wealth Management remains cautiously optimistic, predicting weak growth but no recession. Still, the bank expects Switzerland to eventually reach a deal similar to the EU’s 15% tariff structure. Meanwhile, pressure is mounting on Bern to protect its export-driven economy amid growing global protectionism.
