Switzerland has been rocked by a political and economic storm after the United States imposed an unexpected 39% tariff on Swiss exports — one of the highest rates globally — delivering the blow on August 1, Switzerland’s National Day.
The move has triggered a blame game in Bern, with President Karin Keller-Sutter at the center of criticism. Officials believed they were on track to secure a preferential trade agreement with the U.S., potentially matching the 10% rate offered to the UK. Instead, the Trump administration imposed a near quadruple rate, surprising Swiss negotiators and igniting backlash from the media and business leaders.
Failed Negotiations and Political Fallout
The decision came after months of negotiations led by Keller-Sutter, who is also Switzerland’s finance minister. According to sources familiar with the talks, Swiss officials believed a deal had been finalized with U.S. trade officials, including Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent. Bern had even authorized a 10% rate agreement on July 4.
However, a 30-minute phone call between Keller-Sutter and Donald Trump on Thursday evening took a disastrous turn. Trump, focusing heavily on Switzerland’s $39 billion trade deficit with the U.S., rejected the 10% proposal outright. Sources described the president as fixated on what he perceived as Switzerland “stealing” from the U.S., leaving Keller-Sutter with no room to negotiate.
Swiss media reacted strongly. The SonntagsZeitung called it the president’s “biggest fiasco,” while Blick described the tariff shock as Switzerland’s worst defeat since its 1515 loss at the Battle of Marignano.
Pharmaceutical Sector Under Fire
While Keller-Sutter bore the brunt of public criticism, Swiss corporate leaders have also directed anger at the pharmaceutical industry. The sector, which represents 60% of Swiss exports to the U.S., has come under scrutiny for inflaming tensions with the White House.
Companies like Novartis and Roche — through its U.S. unit Genentech — reportedly received letters from the Trump administration demanding lower drug prices. This week, Greer publicly criticized the sector, emphasizing Washington’s desire to produce more pharmaceuticals domestically.
Swiss watchmaker Breitling’s CEO, Georges Kern, accused the pharma industry of holding the country “hostage” in international trade talks.
Economic Concerns and Industry Impact
The tariff announcement is expected to impact key sectors, including luxury goods, pharmaceuticals, and food exports. Switzerland, which has abolished all industrial tariffs on its side, counts the U.S. as its largest export market for products such as watches, chocolate, precision machinery, and pharmaceuticals.
Despite their exemptions from the new reciprocal tariffs, gold and pharmaceutical products — major contributors to the trade deficit — have added to the confusion in Bern, which still seeks clarity on how to resolve the impasse.
The Swiss stock market, which was closed for the holiday, is now bracing for a possible downturn when trading resumes on Monday, particularly for firms such as Nestlé, Novartis, Roche, Richemont, and Swatch.
Business Leaders Call for a Reset
The Swiss-American Chamber of Commerce remains hopeful that Switzerland’s $150 billion investment pledge in the U.S. could help reopen negotiations. Chamber CEO Rahul Sahgal stressed that Switzerland’s per capita investment offer far exceeds that of Japan or the EU.
“We need to figure out what more we can offer. We are exploring options for another meeting,” Sahgal said.
A Painful Lesson in Power Politics
Observers close to the discussions highlighted a broader issue: Switzerland’s traditional approach to foreign policy, which prioritizes honest and balanced offers, may have left it ill-prepared for the transactional nature of Trump-era diplomacy.
“The Swiss are not used to international power politics,” one source said. “This was a painful lesson.”
As Switzerland scrambles to reassess its strategy, the fallout from this trade shock continues to reverberate through political, diplomatic, and economic circles — serving as a stark reminder of how rapidly fortunes can shift in global trade.
