FT: US slaps Switzerland with 39% tariff in surprise blow to trade relations

A political row has erupted in Switzerland after the United States unexpectedly slapped a 39% tariff on Swiss goods — one of the highest in the world — on the country’s national day.

Swiss President Karin Keller-Sutter is facing mounting criticism over what many see as a severe miscalculation in trade negotiations with the Trump administration, Caliber.Az reports, citing The Financial Times.

Some critics are also directing blame at Switzerland’s powerful pharmaceutical sector, accusing it of provoking the US president’s ire.

“It’s knives out,” said a former Swiss diplomat.

The backlash followed a “disastrous” 30-minute phone call between Keller-Sutter and Donald Trump on July 31, according to several people familiar with the matter. The conversation concluded more than three months of talks during which Swiss officials believed they were on course for a deal similar to that secured by the UK — a 10% tariff rate.

Instead, Trump announced the far steeper 39% levy on August 1, coinciding with Switzerland’s national holiday. The Swiss press condemned the outcome, with SonntagsZeitung calling it Keller-Sutter’s “biggest fiasco” and tabloid Blick describing it as the country’s worst defeat since 1515, when Swiss forces lost to France.

Swiss negotiators say they were confident of an agreement after discussions with US trade representative Jamieson Greer and Treasury Secretary Scott Bessent, and had even pledged almost $150bn in US-bound investment.

Keller-Sutter, who is also finance minister under Switzerland’s rotating presidency system, had publicly claimed in July to have gained “access to Trump” in a way other leaders had not.

The Swiss side had agreed to a 10% tariff — Trump’s baseline rate — a position approved by Bern on 4 July. But during the call, Trump focused solely on Switzerland’s $39bn trade surplus with the US and demanded more concessions.

“The call did not go well in the sense that from the very first minute Trump made it clear 10 per cent was not enough and all he could focus on was Switzerland stealing money from the US,” one source said. “There was nothing Keller-Sutter could say.”

Greer later disputed Swiss claims that a deal had been secured, saying: “Nothing is agreed until everything is agreed.”

The new 39% rate is significantly higher than the 31% tariff Trump had announced for Switzerland in April, and contrasts with the reductions granted to many other countries in the latest round of tariff changes.

Although gold and pharmaceuticals — which account for much of Switzerland’s trade surplus — are exempt from the new duties, the decision has left officials in Bern puzzled over what further concessions could have been offered.

“The problem is the Swiss believe we have to make reasonable and honest offers. We are not good at international power politics,” one person close to the talks said. “It was a painful lesson.”

Some in the business community have turned on the pharmaceutical industry, which sends around 60% of its exports to the US. Breitling chief executive Georges Kern accused the sector of holding the country “hostage” and angering Trump.

This week, Novartis and Roche’s US arm, Genentech, received letters from the Trump administration demanding lower drug prices. Greer also singled out the sector, saying: “They ship enormous amounts of pharmaceuticals to our country; we want to be making pharmaceuticals in our country.”

The Swiss stock market, closed for the holiday on August 1, is expected to face losses when trading resumes, with shares in Novartis, Roche, Nestlé, Richemont and Swatch all likely to come under pressure.

Despite the setback, the Swiss-American Chamber of Commerce believes there is still scope for improvement.

“We have nine million people in Switzerland, yet our investment pledge per capita is much more than what Japan or the EU have pledged,” said chamber chief executive Rahul Sahgal. “If we talk about a $40bn trade deficit, one has to put that [in] perspective. We are seeing if we can have a meeting.”

By Aghakazim Guliyev