When President Trump announced tariffs of 31% on goods imported from Switzerland with a 10% baseline taking effect immediately on all imports, Switzerland was in good company with many other countries that suffered the same fate on 2 April, dubbed by Trump as “Liberation Day”.

Following this announcement, the MSCI Switzerland Price Index plunged by 15%, like many other indexes around the world, before recovering as markets adjusted to the 90-day negotiation period. Meanwhile, the US dollar weakened sharply against the Swiss franc, losing roughly 13% over the period before rebounding partially in April and May.

As of 7 July, the White House extended its reciprocal tariff pause as well as its 10% baseline tariff, pushing its expiration from 9 July to 1 August. Nonetheless, when 1 August arrived, Washington imposed a 39% reciprocal tariff on Swiss goods exports, catching Swiss officials completely by surprise. These measures affect a broad range of Swiss exports, while luxury watches, chocolates, precision instruments, and machinery are likely hit hardest. However, ambiguity persisted over whether pharmaceutical products and precious metals like gold would be exempted.

The Trump administration justified its actions as an act of retaliation for Switzerland’s failure to make meaningful concessions or reduce trade barriers. US officials cited an almost $50 billion goods trade deficit with Switzerland in 2024, a figure Swiss authorities tried to put into context and argue that while Switzerland posts a surplus in goods exports, also exaggerated by trade with precious metals, this is almost offset by a deficit in services.

As shown in the chart, the US is Switzerland’s biggest trading partner representing nearly 20% of all Swiss goods exports.

Taking this into account, these tariffs will have a significant impact on certain key economic sectors. Directly targeted are mechanical engineering, medical technology, automotive manufacturing, watches, IT (tool building), electrical equipment, chemicals, textiles, and metal products. On the other hand, the following list of exempted goods was established: pharmaceutical products, semiconductors, certain consumer electronics and precious metals. Fortunately, these represent the biggest part of Swiss goods exports, with a combined share of nearly 70% in value, displaying Switzerland’s strong economic reliance on high-value and strategic industries and underlining the currently moderate impact of these tariffs.

However, this relief might be short-lived. With the growing uncertainty concerning supplies of vital medicines and with some of the highest medical bills in the world, the US government has big interest in exempting foreign pharmaceutical products in an attempt to reach lower prices. Hence, some threats previously made by President Trump to increase tariffs on pharmaceutical products by up to 250% could still, at least partially, become a reality in the medium to long term, as he wants to reduce his dependence on foreign drug production and shift it to US territory.

Despite mounting pressure from Washington, Switzerland maintains several strong arguments to defend its position. Swiss officials are actively engaging with US leadership to present a more comprehensive and nuanced understanding of the bilateral economic relationship.

Reason 1: The quarterly trade surplus balance in Q1 2025 was exceptional and likely tactical

The first quarter of 2025 painted an unusual picture of Swiss US trade dynamics. Switzerland's exports to the United States surged dramatically by 17.4%, creating a stark contrast with the country's overall export growth of just 3.6% during the same period. This exceptional performance, however, distorts the picture. It was largely driven by a pre-emptive rush of shipments as Swiss exporters and US importers sought to beat expected tariff implementations.

Indeed, some of this imbalance even reversed in April and May, suggesting the surplus is not maintained organically.

Reason 2: Switzerland ranks among the largest investors per capita in the US

More than trading partners, Swiss-owned firms are deeply embedded in the US economy, through job creation and R&D investment. More than 500 Swiss companies have established operations across American soil.

Switzerland stands as the seventh-largest source of foreign direct investment in the United States, representing a remarkable achievement for a country of just 8.8 million people. By the end of 2023, Swiss firms had accumulated over $352 billion in cumulative investments, accounting for 7% of the total $5.4 trillion in foreign direct investment stock in the United States. Swiss investments expanded by 20% between 2018 and 2023, achieving the sixth-fastest growth rate.

Swiss companies support nearly 400,000 American jobs, across diverse sectors including manufacturing, research, and services, typically at some of the highest average salaries among foreign investors. Nestlé alone employs 25,000 people across the United States.

In R&D spending, Swiss companies led all foreign players in 2022, with $14.7 billion invested, accounting for 18% of all research spending by foreign affiliates. This figure surpassed investments from traditional economic powerhouses including Germany, Japan, and the United Kingdom.

Reason 3: The good surplus is misleading

Switzerland may appear to benefit from a goods trade surplus with the US, but the data is skewed by a small number of high-value sectors, primarily pharmaceuticals and precious metals like gold which fall outside tariffs. Once gold transactions are excluded from the calculation, the bilateral goods surplus becomes much more modest, painting a fairer picture of bilateral trade dynamics. It is not a case of trade manipulation or unfair advantage. Additionally, although Switzerland recorded a goods trade surplus of roughly almost 38.7 billion francs in 2024, it simultaneously ran a 20.4 billion francs deficit in services, resulting in a relatively modest net surplus.

Source: Swiss Federal Statistical Office, UBS, SYZ