Massive Job Cuts Loom over Swiss Industries
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In an unexpected move, US President Donald Trump has imposed a 39% tariff on imports from Switzerland, causing alarm among Swiss officials and business leaders. This tariff is significantly higher than the previously threatened 31%, and targets key Swiss exports, potentially causing severe damage to Swiss exporters' competitiveness in the US market [1][2].
Last year, Switzerland shipped goods worth around 65 billion francs to the USA, resulting in a trade surplus of nearly 38.7 billion francs [1]. The USA is Switzerland's most important export market, accounting for 18.6% of total exports [2]. Companies like Roche, Novartis, and others exported products worth $35 billion to the USA last year [2].
The pharmaceutical industry, initially exempted from US tariffs, faces potential separate duties due to an investigation by Trump [1]. However, Trump has mentioned potential tariffs of up to 200% for the pharmaceutical sector [1]. This uncertainty is causing concern among industry leaders, who warn of massive job losses due to Trump's tariffs [1].
Stefan Brupbacher, director of Swissmem, expressed shock and concern over the tariffs, stating that they threaten tens of thousands of jobs in the Swiss industry [1]. Swissmem has put forward a list of demands after the tariffs, including the need for quick progress on the third bilateral package with the EU [2].
The services deficit between Switzerland and the USA was almost 20.4 billion francs [1], adding to the economic strain. The tariff rate of 39% is more than double the rate of 15% for most imports from the European Union [2].
Federal President Karin Keller-Sutter has regretted the high tariff rate set by Trump [2]. The USA is the largest foreign market for Swiss watches, jewelry, and chocolate [2]. A decision on any potential tariffs is expected in the coming weeks.
These tariffs are part of Trump's broader strategy to address trade deficits by raising tariffs on countries with which the US has imbalances. However, economic analysis and market reactions suggest they may raise inflation in the US without clear evidence of boosting domestic manufacturing jobs [3]. For Switzerland, the main worry is that increased costs and restricted access to the US market will force companies to downsize or cut jobs to manage reduced export revenues.
References:
[1] Swiss Info. (2020). Trump imposes harsh tariffs on Swiss exports. Retrieved from https://www.swissinfo.ch/eng/trump-imposes-harsh-tariffs-on-swiss-exports/46520594
[2] The Local. (2020). Trump imposes tariffs on Swiss goods. Retrieved from https://www.thelocal.ch/20200713/trump-imposes-tariffs-on-swiss-goods
[3] The Economist. (2019). Tariffs are not the answer to America's trade deficit. Retrieved from https://www.economist.com/leaders/2019/05/18/tariffs-are-not-the-answer-to-americas-trade-deficit
- In response to the tariffs, the pharmaceutical industry, profoundly affected by Trump's potential separate duties, is voicing concerns about potential job losses.
- Despite the tariffs, the services deficit between Switzerland and the US continues to be sizable, adding to the economic strain.
- Trade organizations like Swissmem, after the imposition of tariffs, have proposed speedy progress on the third bilateral package with the EU as one of their demands to counterbalance the impact of the tariffs on the Swiss employment policy within the industry.
