Switzerland facing 39% US tariff as president leaves Washington empty-handed

Straits Times

2 days ago

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Swiss President Karin Keller-Sutter (right) and Swiss Economy Minister Guy Parmelin leaving the US State Department after a meeting with US Secretary of State Marco Rubio on Aug 6.
WASHINGTON/ZURICH - Swiss President Karin Keller-Sutter left Washington empty-handed on Aug 6 after a hastily arranged trip to avert a crippling 39 per cent tariff on the country's exports to the United States, its biggest market, three sources familiar with the matter said.
Ms Keller-Sutter said she had a 'very good meeting' with US Secretary of State Marco Rubio, but one of the sources said she did not meet with US President Donald Trump or any of his top trade officials.
The Swiss president had been seeking a tariff rate of 10 per cent, which US officials rejected, the source said, adding that most countries are facing much higher tariff rates and reducing the US trade deficit remained Mr Trump's goal.
Washington is potentially seeking more energy and defence exports to Switzerland, according to a Swiss source familiar with the discussions. In return, the Swiss are looking for lower duties on goods sold into the US, a leading buyer of Swiss watches, machinery and chocolate.
Mr Trump announced a tariff rate of 31 per cent for Switzerland in April as part of a broad push to reorder global trade, but
increased the threatened tariff to 39 per cent last week.
'We had a very good meeting today. We had a very friendly and open exchange,' Ms Keller-Sutter told reporters after the meeting at the State Department in Washington. She did not answer a question about what further offers Switzerland would make.
The higher tariff is due to take effect on Aug 7.
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On social media, Ms Keller-Sutter later wrote that she and Mr Rubio had discussed bilateral cooperation, the tariff situation and international issues.
The Swiss delegation was preparing to leave Washington without a deal on Aug 6, a source close to the Swiss delegation said, with the country's Cabinet due to hold a meeting on Aug 7 or 8.
'We came over with the intention of presenting new ideas to the American administration to resolve the tariffs matter, which we have done,' the source said. 'We are ready for negotiations to continue.'
Switzerland was stunned by Mr Trump's decision last week to apply the steep rate - among the highest announced since he launched his global trade reset - which threatens to inflict major damage on its export-orientated economy.
Ms Keller-Sutter and Business Minister Guy Parmelin flew to Washington on Aug 5 for last-minute negotiations aimed at reducing the tariffs before they go into effect on Aug 7.
Additional talks are possible, even after the higher rate takes effect, the first source said.
Mr Parmelin had already raised the possibility of Switzerland buying US liquefied natural gas to help secure a better deal.
Under a deal the EU struck with Washington in July to secure a 15 per cent tariff rate, Brussels agreed to buy US$750 billion (S$960 billion) worth of LNG, oil, and nuclear energy products over the next three years.
While the EU made no formal pledge to buy more US arms, it did indicate to US negotiators that US suppliers would benefit from an increase in defence spending in line with higher Nato commitments agreed under pressure from Mr Trump.
Both concessions, along with a pledge to invest more in the US, were seen as important in clinching a deal, said a person familiar with the US-EU negotiations.
Switzerland already purchases some military hardware from the US and has placed a 6-billion-franc (S$9.5 billion) order to buy Lockheed Martin F-35A Lightning II fighter jets.
While the Swiss government is focused on sweetening its offer to Washington and says it is not planning countermeasures against the US tariffs, some Swiss politicians have called for the F-35 deal to be scrapped over the trade dispute.
Looming economic hit
Earlier on Aug 6, Ms Keller-Sutter and her team met with Swiss business leaders including Roche chairman Severin Schwan, as well as Mr Alfred Gantner and Mr Marcel Erni, founders of Swiss private equity firm Partners Group.
Mr The group, which also included Daniel Jaeggi, president of global energy and commodity firm Mercuria, spoke about the tariffs situation, the government said, without giving further details.
Further meetings are planned with executives from other Swiss companies present in the US.
Business associations warn that tens of thousands of Swiss jobs are at risk if the 39 per cent tariffs are implemented. Swiss cheese producers, for example, are bracing for a steep drop in sales in the US, which bought 11 per cent of cheese exports like Gruyere and Emmentaler in 2024.
'The taxes are enormous,' said Mr Anthony Margot, a fifth-generation cheese maturer. 'We can't replace a market like the United States overnight.'
The blue chip Swiss Market Index was down 1 per cent in early afternoon trading on Aug 6. Following talks with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, Switzerland had agreed a draft statement with the US in early July that was reported to include a 10 per cent tariff rate.
Mr Trump's U-turn on Aug 1, however, followed what some US officials said was a fraught telephone call with Ms Keller-Sutter. Swiss sources said the call was not a success, but denied there was a falling out between the two leaders.
Ms Keller-Sutter did not meet with Mr Greer, Mr Bessent or Commerce Secretary Howard Lutnick during her visit this week, the first source told Reuters. REUTERS