Switzerland Urgently Proposes New Trade Offer to US Amid Tariff Crisis

UPDATE: Switzerland is taking decisive action to counteract the recently announced 39% tariffs on its exports to the United States. The Swiss government has stated it is ready to present a more attractive trade offer, aiming to address US concerns and mitigate the impending tariff situation set to take effect on August 7, 2023.

In a statement released on Monday, the government emphasized its commitment to fostering foreign direct investments and enhancing research and development in the US. Officials have also clarified that they are currently excluding any countermeasures, signaling a willingness to negotiate.

President and Finance Minister Karin Keller-Sutter convened an emergency meeting of the governing Federal Council to strategize on how to move forward after the unexpected tariff announcement, which has raised alarms within the Swiss economy. Negotiators from the Swiss State Secretariat for Economic Affairs are already in contact with their US counterparts, seeking a possible extension to the deadline and a resolution that benefits both nations.

The US trade move came as a shock, particularly as recent discussions had hinted at a promising outcome before the August 1 deadline. The Swiss government has stressed that the trade surplus with the US is not due to any “unfair trade practices,” attributing the imbalance in part to substantial gold exports. Switzerland stands as the world’s largest refining hub for gold, with billions flowing in and out annually, alongside significant contributions from pharmaceuticals, coffee, and watches.

Keller-Sutter faced criticism for not having a contingency plan in place, particularly for being caught off guard by the US’s abrupt decision. She has indicated a willingness to travel to Washington for negotiations, stating, “I don’t rule out such a visit, but first, the two sides should come closer together in their positions,” according to the newspaper Schweiz am Wochenende.

Despite the tariff backlash, the Swiss president is not under immediate threat of losing her position, as the Swiss political system ensures continuity with an annual rotation of presidential duties. Last year, Switzerland recorded a significant $38 billion bilateral trade surplus with the US, underscoring the importance of this relationship.

While Swiss exports to the US plummeted with the introduction of tariffs earlier this year, a rebound was noted in June, indicating that trade remains resilient. According to Bloomberg Economics, the tariff shock could risk approximately 1% of Switzerland’s GDP over the medium term, an alarming prospect for the nation.

One potential avenue for Switzerland to alleviate tensions is by offering to purchase liquefied natural gas from the US, despite its landlocked position and reliance on hydroelectric and nuclear power. Such an import would necessitate traversing neighboring countries, potentially increasing costs.

As of 3:15 PM today, the Swiss market benchmark SMI was down just 0.5%, reflecting cautious optimism. Financial analysts from Lombard Odier have predicted that negotiations could reduce the 39% tariff closer to the 15% rate agreed upon with the EU.

Political reactions are varied, with Franziska Ryser of the Green party highlighting the unpredictability of US decisions under the current administration. “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 stated, advocating for closer ties with the EU.

As negotiations unfold, all eyes will be on both governments to see if a compromise can be reached before the critical deadline. Stay tuned for further updates on this developing situation that could reshape international trade relations.