In a dramatic escalation of trade tensions, U.S. President Donald Trump has announced a hefty 39% tariff on Swiss imports, citing frustration over Switzerland's failure to address a substantial trade imbalance. The unexpected move follows a tense phone call between President Trump and Swiss President Karin Keller-Sutter, during which Trump expressed dissatisfaction with Switzerland's $40 billion annual trade surplus with the U.S.
According to Bloomberg, the conversation took place on July 31st, just hours before a deadline Trump set for reaching a trade agreement. When no satisfactory proposals were offered by the Swiss side, Trump decided to impose the reciprocal tariff, which surpasses the previously announced 31% rate from earlier this year.
President Keller-Sutter dismissed Trump's assertion that Switzerland was "stealing" money from the U.S. as "absurd." She indicated openness to further negotiations but emphasized that positions need to be narrowed before any potential trip to Washington, D.C.
The tariff decision has sent shockwaves through Swiss industries, particularly pharmaceuticals and luxury watches, which constitute significant portions of Switzerland's exports to the U.S. The Swiss pharmaceutical sector faces additional pressure as the Trump administration pushes for lower drug prices. A draft trade agreement had initially included exemptions for Swiss pharmaceutical companies, but this provision is now in jeopardy.
The imposition of the 39% tariff would place Switzerland at a competitive disadvantage compared to EU countries, which face a much lower 15% tariff. Swiss officials reportedly underestimated Trump's focus on the trade deficit and were caught off guard by the abrupt escalation.
Swiss watchmakers, including high-end brands like Rolex and Patek Philippe, are also reeling from the news. The Federation of the Swiss Watch Industry expressed "disappointment and surprise" at the U.S. decision, noting that President Trump himself has been a fan of Swiss watches.
The tariff hike is expected to increase retail prices for Swiss watches in the U.S. by 12-14%, according to industry experts. As the deadline for the tariff's implementation approaches, Swiss industries are bracing for a turbulent period in U.S. trade relations, hoping for a resolution that could avert a prolonged trade war.
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