Washington (AFP) – The United States and Switzerland said Friday that they have reached an agreement to sharply lower tariffs imposed by President Donald Trump, with the Alpine nation vowing to invest $200 billion in the US to win over the White House. The deal was announced a day after talks in Washington, where Swiss economy minister Guy Parmelin visited in hopes of easing steep duties the Trump administration rolled out this year.
Trump shocked Switzerland in August when he slapped an added 39-percent duty on imports of goods from the country, among the highest in his global tariff blitz. The latest framework agreement brings this tariff down to 15 percent for Switzerland and Liechtenstein products, the White House said. The new rate will serve as a ceiling for goods previously tariffed at lower levels, while goods already facing tariffs above 15 percent will not be additionally hit — similar to US deals with other key partners.
“We’ve essentially reached a deal with Switzerland,” US Trade Representative Jamieson Greer told CNBC in an interview. He added that the Swiss would send manufacturing, such as pharmaceuticals, gold smelting and railway equipment, to US shores. A White House statement said the countries hope to conclude their full pact by the first quarter of 2026. As part of the deal, “Swiss companies intend to make $200 billion in direct investments in the United States by the end of 2028,” a Swiss government statement said. This would also include efforts to strengthen vocational education and training.
Cautious relief – The high tariff rate had jeopardized entire sectors of the export-heavy Swiss economy, notably watchmaking and industrial machinery, but also chocolate and cheese. While the pharmaceutical industry, Switzerland’s largest export sector, enjoys exemptions from these sweeping tariffs, it faced regular threats that Trump would soon target them too. The Trump administration has excluded specific sectors from its countrywide tariff rates, but has been pursuing investigations that lead to industry-specific duties.
The latest deal brings some relief by committing that pharmaceutical goods and semiconductors of Switzerland and Liechtenstein face a maximum tariff of 15 percent if Washington were to impose fresh duties on these sectors. In turn, both countries intend to remove some tariffs across agriculture and industrial sectors, the White House added. Parmelin said Friday that discussions will continue for key products like industrial machinery, steel, aluminum, coffee, and cheese.
Swissmem, the association of the mechanical and electrical engineering industry, expressed relief at Friday’s announcement. Swiss businesses have been worried that their competitors in other wealthy economies will have an edge over them, given that the European Union and Japan had negotiated lower tariff levels of 15 percent. While Swissmem noted that the deal brings “temporary relief,” its president Martin Hirzel warned that “we must not let our guard down. New tariffs could be introduced.”
Last week, the heads of six top Swiss firms, including watchmaker Rolex and luxury goods giant Richemont, met with Trump to plead for relief from the tariffs. Yves Bugmann, president of the Federation of the Swiss Watch Industry, said the announced tariff reduction was good news for an industry facing challenges including an unpredictable Chinese market. He added that the high rate had been “unjustified and caused a great deal of uncertainty” in the sector. Trump has imposed sweeping duties on trading partners around the world since returning to the presidency, with separate levies on specific sectors like steel, aluminum, and autos.
© 2024 AFP
