Swiss govt calls emergency meeting as Trump hits goods with 39% tariff

Switzerland's government was due to hold an emergency meeting on Thursday after US President Donald Trump implemented a crippling import tariff on Swiss goods that threatens to inflict serious damage on its export-focused economy. 

The 39 per cent import levy - among the highest of any applied under Trump's global trade reset - took effect at midnight Washington time (0400 GMT) after an 11th-hour effort by Swiss officials failed to produce a better deal. 

An urgent meeting of the seven-member Federal Council - Switzerland's governing cabinet - would take place in Bern in the early afternoon, the government said a post on X. 

Swiss President Karin Keller-Sutter left Washington on Wednesday without a deal following a hastily organised trip. While she said she had a "very good meeting" with US Secretary of State Marco Rubio, Keller-Sutter did not sit down with Trump or any of his leading trade representatives, two sources told Reuters. 

Her proposal for a 10 per cent tariff rate was rejected by US officials, one of the sources added. Dozens of countries that have failed to strike deals with Washington are facing new tariff rates, which US importers began paying on Thursday. 

"BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA," Trump wrote on his social media platform Truth Social. 

Trade talks between Switzerland and the US will continue, a separate Swiss source familiar with the discussions told Reuters.

The person, who spoke on condition of anonymity due to the sensitivity of the matter, believed an agreement would ultimately materialise but more time was needed to strike a deal. 

Switzerland was stunned by Trump's decision last week to apply the steep rate, which is much higher than those negotiated by the European Union, Britain, Japan and South Korea. 

Thursday's front page of the daily tabloid Blick was all black with the banner headline "39 per cent". "This number is insanely high," said Manfred Elsif, director of research at the University of Bern's World Trade Institute. 

"Trump is simply obsessed with trade deficits in goods and does not understand that his short-sighted actions sour relations with allies." Switzerland removed tariffs on nearly all imports in 2024, extending virtually free access to its markets for US

products. 

But Keller-Sutter said last week that Trump was focused on its trade surplus with the United States, which amounted to 38.5 billion Swiss francs ($48 billion) last year largely due to pharmaceutical exports, as well as gold, machinery and watches.

Switzerland's surplus was up by 17 per cent in the first six months of this year, Swiss customs data showed, as companies such as watchmaker Swatch Group rushed to avoid the tariffs by front-loading shipments. 

Industry associations and economists have said the tariffs will inflict major damage on the economy, put jobs at risk and curtail growth. Hans Gersbach, an economist at KOF Swiss Economic Institute at ETH, a Zurich university, estimated that the levies, if they remain in place for an extended period, would result in a GDP loss of 0.3 per cent to 0.6 per cent over the next year. 

"We will not enter a recession, but we are moving towards stagnation," he said. The US is a leading market for Swiss watches, specialised machinery, pharmaceuticals, chocolate and cheese. 

"If this horrendous tariff burden remains in place, it will mean the de facto death of the export business of the Swiss tech industry to the USA," industry association Swissmem said on Thursday. Switzerland's private sector urged the government to continue talks with Washington, though most companies took a low profile on Thursday, preferring not to comment on the tariffs' expected impact. 

Chocolate maker Lindt & Spruengli said it was monitoring the situation, though most of its products sold in the US are made in New Hampshire. Zurich Insurance CEO Mario Greco, speaking as the company reported its first-half results, said he was confused by Trump's tariff announcements. 

"I think this is part of the game, to create chaos and make announcements every day," he said. The Swiss blue-chip index was, meanwhile, up 0.8 per cent at 1045 GMT, in line with broader markets, after hitting its lowest level since late April on Monday. The franc firmed, leaving the dollar down 0.1 per cent on the day at 0.80605 francs. 

"The lack of any drama so far on Swiss markets suggests a hope of some form of deal in the coming weeks," said IG broker Chris Beauchamp.    (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)