I’m an American living in Switzerland, which means I’m watching this trade war unfold from the wrong side of the Atlantic. On the 7th of August, the US slapped a 39% tariff on Swiss exports — the highest against any European country. Many people in the US see these
tariffs as politics. However, for people here, it’s their livelihood.
Now, before we delve into the effects of these tariffs, we need to understand what tariffs are.
A tariff is a tax that a government charges on goods coming into a country from abroad. A
common misconception is that tariffs require the country exporting to pay the tariff. However, it’s actually the importers who pay this tariff. A government could use tariffs to make foreign products more expensive so that local businesses can thrive, or as pressure in trade negotiations or disputes.
Now knowing this, why did the Trump administration place a 39% tariff on Swiss exports? US officials cited Switzerland’s goods trade surplus, which amounted to between 38 and 48
billion dollars, as a primary motivation. They stated that this trade imbalance disproportionately benefits Switzerland more than it benefits the US. This increase in tariffs
was a part of the Trump administration’s broader “Liberation Policy,” which imposed tariffs on all countries and then placed additional, higher tariffs on countries with significant trade surpluses over the US. This tariff primarily affects highly valued Swiss exports such as watches, chocolate, machinery, and gold.
Now, apart from being “extremely vulnerable,” and “humiliated,” as said Sherban Tautu,
founder of Geneva-based asset manager Ten Edges Capital, what are the specific effects of
these tariffs? The levy on Switzerland has been confirmed, as the August 7th deadline has
passed, and they threaten to cripple key industries in the neutral state’s export dependent
economy. The United States is the leading destination for Swiss exports, notably watches,
pharmaceutical products, and machinery. In fact, according to UBS, every second franc that
Switzerland earns is from foreign trade and about 19% of their exports go to the US,
effectively making them the sixth largest foreign investor in the US.
Swiss companies, on the other hand, are already beginning to adjust their operations in
response to the tariffs. Pilatus aircraft has already halted deliveries of PC-12 and PC-24 jets
to the US since the 39% tariff makes them significantly less competitive. The company is
currently exploring ways to produce aircrafts in the US to avoid the tariff increasing their
prices. Major watch exporters such as Rolex and Omega have been affected as well; roughly
16% of Swiss watch exports arrive in the US, so tariffs would inevitably increase watch
prices and reduce competitiveness. The last example is the gold refinery sector; these tariffs
apply only to certain forms of gold bars such as one-kilo and 100-ounce gold bars.
In conclusion, the US–Swiss tariff dispute just shows how fragile the most stable trade
relationships can get when political priorities shift. For Switzerland, whose identity is rooted in high value exports like rolex watches or Novartis pharmaceuticals, the American market is a stage to showcase Swiss precision, quality, and innovation. For the United States, the quick move to impose tariffs shows a broader protectionist mindset and strategy designed to favor domestic manufacturing. However, this comes at the cost of alienating a reliable trading partner and raising costs for its own consumers, the American citizens.Tariffs may portray symbolic leverage in negotiations, but they will inevitably erode trust and invite retaliatory measures. Whether this dispute will end in a compromise or escalate into a deeper trade altercation depends on the willingness of both nations to recognize the benefits of an open market.
In a global market defined by competition for strategic advantage, the lesson is that
economic interdependence isn’t always a weakness that can be exploited, but a strength that must be preserved.
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