Latest news with #Swiss government
Yahoo
3 days ago
- Business
- Yahoo
Switzerland warns its companies that no, they can't dodge Trump's tariffs by routing goods through the tiny neighboring country of Liechtenstein
Switzerland and Liechtenstein have long shared an economic market, but President Donald Trump has imposed a steep tariff on Swiss goods compared to its Liechtensteiner neighbors. The Swiss government has clarified that Swiss businesses will be unable to reroute their products through the neighboring principality. The Trump administration recently implemented a 40% tariff on transshipments, or the movement of goods to an intermediate destination ostensibly with lower levies, to disincentivize this behavior. The Swiss government is telling its domestic companies that they have not, in fact, found a clever way to skirt President Donald Trump's tariffs by routing goods through the tiny neighborhood country of Liechtenstein. Switzerland and Liechtenstein share a 102-year-old customs treaty allowing the 25km-long principality to share the Swiss economic area. But that agreement, which makes it nearly impossible to measure trade between the two closely linked countries, does not mean they are tariffed similarly. While U.S. tariffs on Swiss exports swelled to 39% in Trump's latest round of tariffs, levies on goods from Liechtenstein are only 15%. The Swiss State Secretariat for Economic Affairs (SECO) has said Swiss firms cannot pass off goods as Liechtensteiner by routing them through the principality because they would still be recognized as Swiss in origin. 'Such circumvention via Liechtenstein is fundamentally impossible. The United States applies its non-preferential rules of origin when levying additional tariffs,' a SECO spokesperson told Fortune in a translated email statement. 'For a product to be considered 'Liechtenstein origin,' it must either be entirely manufactured in Liechtenstein or [have] undergone sufficient processing.' Liechtenstein head of government Brigitte Haas said last week there's concern, though improbable, of Swiss companies looking to Liechtenstein for ways to dodge import taxes, but the risks are high. 'There's a fear that there might be some circumvention, but those are subject to a 40% tariff,' Haas said in an interview with Swiss outlet SRF. 'I hardly think anyone would want to go through that.' Trump's transshipment crackdown Last month, the White House imposed a 40% penalty tax on 'transshipments,' or the movement of goods to an intermediate destination, meant to disincentivize this particular behavior. The Trump administration is aware that countries with lower reciprocal tariff rates than its neighbors are incentivized to reroute their products, according to Robert Lawrence, Albert L. Williams Professor of International Trade and Investment at the Harvard Kennedy School. For years, China has used Mexico and Vietnam, among other countries, as transshipment bases prior to exporting goods to the U.S., according to a Brookings Institute report from June. These transshipments are having meaningful impacts: As China's trade surplus with the U.S. decreases, it has been completely offset by the increase in its trade surplus with other trading partners, the report found. While the transshipment penalty was meant to address China, Lawrence told Fortune, it would apply to any country engaging in the behavior—despite some experts arguing the order lacks key details that would help enforce it. 'It was really important with the response to China,' Lawrence said. 'But there's always this incentive to arbitrage between countries who are close to one another but have differentiated tariff treatment.' High stakes in Switzerland With Switzerland and the U.S. failing to come to a trade agreement before the Aug. 1 deadline, Swiss companies now fear Trump's steep tariffs could roil domestic businesses, particularly in the industrial machinery, cheese, and chocolate industries. While Switzerland may rely on the U.S. as a key importer, the U.S. may be able to find suitable alternatives elsewhere, Lawrence said, putting the onus on Swiss companies to absorb the cost of tariffs in order to keep prices competitive in the U.S. market. Liechtenstein could likewise suffer, according to head of government Haas, who said last week that although the principality has stopped trade negotiations with the U.S. and accepted the 15%, Switzerland's economic health could waver and impact Liechtenstein, which counts Switzerland as its domestic market. Haas also said many Liechtensteiner products don't list Liechtenstein as their certified place of origin, leaving uncertainty about how explicit the U.S. was in outlining the reciprocal tariffs for the principality. U.S. consumers could meanwhile begin to feel the impacts of these steep reciprocal tariffs, responding differently to the alternatives available from other countries, should Swiss imports no longer be as readily available or affordable. For example, according to Lawrence, U.S. consumers may now buy more Cadbury chocolate from the UK—where tariffs sit at 10%—despite not finding the product as appealing as Swiss chocolates, but because it's theoretically cheaper and more abundant. But these ramifications are about more than just chocolate. 'There's going to be a lot of inefficiency,' Lawrence said. 'Americans are going to buy inferior products.' This story was originally featured on Effettua l'accesso per consultare il tuo portafoglio
Zawya
3 days ago
- Business
- Zawya
Plane imports discussed as part of Swiss-US tariff impasse, airline says
Discussions on how to lower Switzerland's tariff burden with the United States have broached importing aeroplanes, Swiss International Air Lines said on Wednesday, as the country seeks to reduce its trade surplus with the U.S.. Swiss officials and business leaders are trying to craft a plan that will persuade the U.S. to reduce the tariffs of 39% imposed last week on Switzerland by the Trump administration, to the dismay of the Swiss government. U.S. President Donald Trump has cited the country's trade deficit in goods with Switzerland - more than $38 billion in 2024, according to U.S. figures - as grounds for the tariffs. Among the business executives who accompanied top Swiss government officials in Washington last week during a last ditch push to avert the tariffs was Jens Fehlinger, CEO of Swiss International Air Lines, a unit of Germany's Lufthansa. Swiss newspaper Tages-Anzeiger reported that Fehlinger had pitched the idea to the Swiss officials of having Lufthansa process future purchases of Boeing aircraft through Switzerland in a bid to cut the U.S. trade deficit. Responding to a question on the report, Swiss International said the talks over trade included discussion about the "framework conditions for aircraft imports and possible options – for the Lufthansa Group, SWISS, the United States, and U.S. companies". "Any substantive statements on these considerations and the negotiations themselves remain the responsibility of the relevant government agencies," it added. A source familiar with Switzerland's trade discussions said the plane import idea had arisen but was not very concrete. In a statement, Lufthansa said it was interested in the success of its Swiss unit and the Swiss economy. "Fleet procurement at the Lufthansa Group is carried out in close coordination with the airlines," it added. The Swiss economy ministry did not respond to a request for comment on the story.
Yahoo
06-08-2025
- Business
- Yahoo
Switzerland scrambles to ink trade deal with US amid certain 'economic blow' due to tariffs
The Swiss government announced on Monday that it is preparing a "more attractive offer" in its trade negotiations with the United States, in a bid to avoid high 39% US tariffs on its imports, which would severely damage the export-driven Swiss economy. In an official statement following an emergency government meeting, the Federal Council - the executive body of the Swiss government - confirmed its intention to continue talks with Washington, even after US President Donald Trump's 7 August deadline for the new tariffs to come into force. The government said in a statement: "Switzerland enters this new phase ready to present a more attractive offer, taking US concerns into account and seeking to ease the current tariff situation." While pledging to continue dialogue and secure fair trade treatment compared to its main competitors, the government did not disclose the details of the offer and stressed that it is not currently considering countermeasures. An unexpected blow for Switzerland Switzerland was caught off guard on Friday by the US administration's decision to impose some of the highest tariffs as part of Trump's policy to restructure global trade. The decision has caused widespread concern in economic circles, with industry organisations warning that tens of thousands of jobs are threatened by the new tariffs. It is estimated that the tariffs, which come into effect next Thursday, will affect about 60% of Swiss exports to the United States, leaving few options for Bern, which considers Washington its largest market for its exports of medicines, watches, machinery and chocolate. The Swiss government declined to comment on whether President Karin Keller-Sutter would travel to Washington for direct talks, a proposal made by a number of officials, including Nick Hayek, CEO of watchmaker Swatch. Related Boeing worker strike stalls production of new and advanced US fighter jet Europe's M&A market is alive and kicking - in spite of the odds According to economist Hans Gersbach of the ETH University in Zurich, a 39% tariff could reduce Switzerland's GDP by between 0.3% - 0.6%. If the pharmaceutical sector, which is currently untouched by the tariffs, is included, the contraction could exceed 0.7%, while long-term disruptions could reduce GDP by more than 1%. Nomura expects the escalation to prompt the Swiss National Bank to cut interest rates at its next meeting in September. US accusations of 'unilateral trade relationship' The White House justified its decision to impose tariffs by accusing Switzerland of not making "meaningful concessions" on the issue of removing trade barriers, describing the current relations between the two countries as "one-sided". On the other hand, Swiss officials and economists expressed surprise that their country was targeted by this measure, despite the depth of trade relations between the two sides. The Swiss statement noted that the volume of bilateral trade has quadrupled over the past 20 years, while Switzerland is the sixth largest foreign investor in the United States. He also pointed out that Switzerland had unilaterally abolished all customs duties on industrial goods as of 1 January 2024, allowing more than 99% of US goods to enter the Swiss market without duties. Trade deficit at the centre of the crisis Trump blames the current regime for a trade deficit estimated at $1.2 trillion (€1.04tn). According to official data, Switzerland recorded a trade surplus with the US of 38.5 billion Swiss francs (€41.2bn) last year, putting it under the microscope as part of Trump's efforts to reduce the deficit. Swiss President Keller-Sutter told Reuters on Friday: "The president is very focused on the trade deficit, because he sees it as an economic loss for the United States." Related The Big Question: Is a Swedish start-up the answer to Europe's ammunition problem? Seven all-American products that are actually 'Made in Europe', set to be hit by US tariffs The US decision has angered Switzerland because of what it sees as "discrimination". Government data shows that the European Union, Japan and South Korea - all of which have larger trade surpluses with Washington - have been able to negotiate tariffs of no more than 15%. Figures show that the EU's trade surplus with the US is about $235bn (€204bn), compared to $70bn (€61bn) for Japan and $56bn (€49bn) for South Korea. Options on the table Swiss Economy Minister Guy Parmelin hinted over the weekend that the government is open to reviewing its offer, talking about options including buying US liquefied natural gas and increasing Swiss investments in the US. However, some politicians have called for a stronger response, including one who suggested cancelling a 6 billion CHF deal to buy F-35A Lightning II fighter jets from the US. Related Boeing worker strike stalls production of new and advanced US fighter jet In financial markets, the main Swiss stock index (.SSMI) fell 0.4% on Monday, bucking the positive trend in Europe where the STOXX 600 index rose 0.8%. Shares of luxury watch companies such as Richemont and Swatch fell amid volatile trading. Richemont was down 1.5% after a 3.5% drop on the day, while Swatch was down 1.8% after a 5% loss earlier in the day. On the currency front, the Swiss franc was the worst performer against the dollar, rising 0.4% to CHF0.8073, nearing a one-month high. 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