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Business Standard
5 days ago
- Business
- Business Standard
Swiss scramble to avert Trump's 39% tariff ahead of looming deadline
The Swiss government held crisis talks on Monday to come up with a proposal that might dissuade US President Donald Trump from imposing 39 per cent tariffs on the country in less than three days. With the rate — the highest among industrial nations — set to go into effect on Aug. 7, President and Finance Minister Karin Keller-Sutter convened an emergency meeting of the governing Federal Council on Monday to discuss how to proceed. Separately, negotiators with the Swiss State Secretariat for Economic Affairs have reached out to their US counterparts to try and find a way forward. The agency, which hammered out a far more favorable tentative deal with the US more than a month ago, also held a briefing with business leaders on Monday. Keller-Sutter, who was criticized in the Swiss press over the weekend for allowing Trump to blindside her without a backup plan, said she would be willing to make a last-minute trip to Washington if she thought there was a chance a deal could be made. 'I don't rule out such a visit, but first, the two sides should come closer together in their positions,' she told the newspaper Schweiz am Wochenende. It's not clear what, if any, response there has been from the US government. 'It's unfortunate that the Swiss took so much time' to react, says Thomas Borer, a former Swiss diplomat who now runs his own consulting firm, echoing the criticism made in the press. Despite the backlash, the Swiss president doesn't face any immediate danger of losing her job. The system is designed for continuity, and the presidency rotates on an annual basis, meaning her term running the country will come to a close at the end of the year. The Trump administration justified Friday's move by claiming that Switzerland had in essence stolen money from the US and should therefore be hit with a tariff rate commensurate with the trade deficit — a notion Ketter-Sutter dismissed as 'absurd.' Switzerland ran a $38 billion bilateral trade surplus with the US last year, according to US Census data, which was the 13th biggest for the world's largest economy. While Swiss exports to the US collapsed after the introduction of tariffs in April, they rebounded in June, suggesting that trade between the two countries remained robust. What Bloomberg Economics Says... 'We estimate that this represents a tariff shock of around 23 percentage points for the Swiss economy, putting roughly 1 per cent of its GDP at risk over the medium term.' There are not many routes available to Switzerland, but one is to offer to buy liquefied natural gas from the US. While the landlocked country is focused on hydroelectric and nuclear power, it does use a small amount of gas, primarily in the winter to cushion swings in its energy supply. Should Switzerland choose to import more gas, it would have to travel through neighboring countries, which could potentially increase transit costs. So far, the expectation appears to be that Keller-Sutter and the government will secure a better deal. The Swiss market benchmark SMI was down just 0.43 per cent as of 11:37 a.m. on Monday. 'We expect negotiations to bring the 39 per cent Swiss tariff rate closer to the 15 per cent agreed with the EU,' Lombard Odier investment strategists said in a research note. 'In the unlikely event that this trade dispute is not resolved,' they added, they will revise their forecast for gross domestic product. Given the 'volatility of decisions we've seen from the US,' there's hope that a solution may be found, Franziska Ryser, a lawmaker of the Green party, told Bloomberg. 'On the other hand, we must draw political conclusions from the situation and acknowledge that — at least under the Trump administration — America is no longer a reliable partner,' she said. 'This means that we should strengthen cooperation with the EU and coordinate more closely with our European partners.'
Mint
02-08-2025
- Business
- Mint
Swiss Tariff Deal Push Hits Roadblock in Heated Trump Call
Switzerland's 11th-hour phone call with Donald Trump offered the nation a harsh reality check: A trade deal isn't a deal unless the US president personally closes it. At 8 p.m. Swiss time on Thursday — 2 p.m. in Washington — President Karin Keller-Sutter spoke with her American counterpart and discovered the two leaders had vastly different views on the fairness of their bilateral trade relationship. The clock added urgency, with just 10 hours to go before Trump's higher taxes on imports were set to take effect Friday for many economies without an agreement. Tariff Tracker: Trump's Trade War and the Economic Impact Rather than considering a broader picture that included services, foreign investment, and Swiss cooperation offers — which Trump had previously been open to, according to a Swiss official on the call — he zeroed in on Switzerland's merchandise trade surplus. For Trump, a goods trade imbalance of nearly $40 billion is akin to stealing from the US and he wanted the Swiss to increase its offer, the person said. When Keller-Sutter didn't offer anything that would see the trade balance change, Trump was so angry that the 39% rate he imposed on the Swiss hours later was chosen more or less at random, according to a person familiar with the matter. Keller-Sutter was quoted as saying the notion was 'absurd' that Switzerland had in essence stolen money from the US and should therefore be hit with a tariff rate commensurate with the trade deficit. The Swiss state secretariat for economic affairs, which negotiates on tariff and trade matters, 'has already made initial contacts' with their US counterparts for further discussions, Keller-Sutter said Friday. It's not clear what, if any, response has been from the US government. Asked if she'd be willing to make a last-minute trip to Washington before Aug. 7 when the new tariffs are due to kick in, Keller-Sutter said, 'I don't rule out such a visit, but first, the two sides should come closer together in their positions,' according to Swiss newspaper Schweiz am Wochenende. That rate, if it stands, would put Switzerland at a big disadvantage to European Union member states, which negotiated a preliminary deal with Trump for a tariff on EU goods of 15% while pledging investments in the US economy and purchases of the country's exports. Trump's focus on the goods imbalance caught the Swiss by surprise as negotiators from both sides had more than a month before hammered out the framework of a deal, which the Swiss government then endorsed on July 4. Both Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer had agreed to the draft, according to two people familiar with the matter, so the Swiss believed a final nod from the Trump administration would be more of a formality. The White House press office didn't immediately respond to a request for comment. Speaking on condition of anonymity, a White House official portrayed the outcome of the call as the Swiss refusing to make meaningful concessions on trade barriers. A country that is very wealthy wasn't going to get an agreement without major concessions, the person said. Crucially, the draft included exemptions from US tariffs for Switzerland's important drugmakers, Bloomberg has reported. On Friday, after Trump's executive order laying out his global tariff rates set the effective date at Aug. 7, Greer indicated that the levies are designed to incentivize manufacturers like pharmaceutical companies to produce in the US. 'We weren't able to reach agreement on the best way to reduce that trade deficit at all,' he told Bloomberg Television. 'They ship enormous amounts of pharmaceuticals to our country. We want to be making pharmaceuticals in our country.' Saying that Swiss-US negotiators had prepared a deal that was ready to be signed is 'an overstatement,' Greer said. 'The reality is: All of the countries, you trade back and forth paperwork and then you take it back to your leaders to get guidance from them,' he said. 'And so nothing is agreed until everything is agreed — that's what every trade negotiator knows.' The Swiss government declined to comment on the phone conversation. Still, in his Bloomberg TV interview, Greer said that new talks before that date are 'not my focus.' If countries call for negotiations, 'I am always going to talk to these folks, and if they have proposals I'll talk to them and I will speak to the president,' he said. 'We are focused on implementation and doing what's right to change the trading system to one that benefits American workers.' With assistance from Annmarie Hordern, Lisa Abramowicz, Dani Burger and Hugo Miller.
