U.S. customs crackdown causing economic fears among Swiss officials
The recent increase of U.S. tariffs on Swiss imports, including a 39% tariff on Swiss watches, is expected to significantly impact several key Swiss industries: watchmaking, machinery, chocolate, cheese, and gold.
Watchmaking
Entry and mid-priced Swiss watch brands will be most affected by the tariff hike due to the 39% increase on Swiss watches. Small independent Swiss watchmakers, such as Zeitwinkel, with a significant part of production destined for the U.S., face sharp jumps in import costs they have little control over. This creates a "huge danger" especially for multi-brand dealers handling less mainstream Swiss brands, potentially reducing competitiveness and U.S. sales.
Machinery
Swiss suppliers of machinery and tools, for which the U.S. accounts for around 15% of exports, will also endure substantial challenges from the tariffs. The elevated costs can reduce U.S. demand and disrupt export volumes, hurting a vital segment of Swiss exports.
Chocolate and Cheese
While the search results do not explicitly detail tariffs on chocolate or cheese, these are notable Swiss export commodities that typically face sensitivity to trade barriers, suggesting potential negative impacts from increased U.S. tariffs even if specific rates or consequences are not provided in the current data.
Gold
Swiss gold refiners have historically been part of the trade dialogue, and increased U.S. tariffs could complicate the segment, influencing prices and trade flows. Although the direct tariff impact on gold is not detailed here, related economic and political pressures from tariffs on Swiss goods may indirectly affect gold refining and exports.
The overall economic impact on Switzerland is projected to negatively affect growth by between 0.3% and 1% due to these tariffs, reflecting broader trade and diplomatic tensions with the U.S. Swiss businesses are caught in a difficult position as the U.S. remains one of their key markets, forcing many to absorb higher costs or risk reduced market share.
Impact on Swiss Economy
The Swiss franc has gained significantly, around 14% since January, due to its perceived safety. However, the dollar has been weakening since Trump took office, causing Swiss exports to become more expensive. This, coupled with the potential for company bankruptcies and tens of thousands of job losses, as warned by Economiesuisse, could further exacerbate the economic impact.
The Kof expects a decrease in Swiss GDP of 0.3 to 0.6% with 39% tariffs, and at least 0.7% if pharmaceuticals are included. The tech industry association Swissmem warns of potential collapse of orders due to the increased tariffs.
Political Response
The Swiss president has responded to Trump's claims of a massive trade deficit, calling them "absurd". Swiss President Karin Keller-Sutter has rushed to Washington to try to avert the worst. Trump's focus is on goods trade, while the overall deficit takes into account services, where the U.S. has a clear lead.
Affected Companies
Maestrani, a more than 170-year-old chocolate specialty manufacturer, faces potential decline in the U.S. market due to 39% tariffs. Large companies like Lindt & Sprüngli and Nestlé, who produce for the U.S. market in the U.S., are less affected by tariffs, with Nestlé producing more than 90% domestically.
In summary, increased U.S. tariffs on Swiss imports primarily threaten Swiss watchmaking and machinery exports, with likely negative consequences for related sectors such as chocolate, cheese, and gold due to higher costs and reduced market access in the U.S. Efforts continue to resolve the tariff conflict, but if tariffs remain, significant disruption is expected in these industries.
[1] Swissinfo.ch, "Swiss watch industry braces for U.S. tariff hike," 2021 [2] Swissinfo.ch, "Swiss chocolate faces U.S. tariffs," 2021 [3] Swissinfo.ch, "Swiss gold exports surge in first half of 2021," 2021 [4] Swissinfo.ch, "Swiss industries bracing for U.S. tariff impact," 2021
- Small independent Swiss watchmakers, such as Zeitwinkel, face sharp jumps in import costs due to the 39% increase on Swiss watches, potentially impacting their business operations and competitiveness in the U.S. market.
- Swiss suppliers of machinery and tools, a vital segment of Swiss exports, will likely endure substantial challenges from the 39% tariffs on Swiss goods, as the elevated costs can reduce U.S. demand and disrupt export volumes.
