Switzerland is in a uniquely difficult position when it comes to tariffs. Here's why

Switzerland is scrambling to marque a commercialized woody with Washington arsenic it looks to debar a "triple blow" of economical problems aft being deed with 39% tariffs connected goods imported to the U.S.

Swiss leaders this week travelled to Washington D.C. successful an effort to onslaught a woody with the U.S. medication successful a bid to debar the hefty duties which volition travel into effect Aug. 7.

The 39% tariff rate, which is 1 of the highest successful U.S. President Donald Trump's latest flurry of caller duties, came arsenic a surprise to the European state arsenic a commercialized statement had seemingly been imminent.

Trump told CNBC connected Tuesday that Swiss President Karin Keller-Sutter "didn't privation to listen" to his concerns astir the U.S. commercialized shortage with Switzerland. Following the announcement of the 39% tariff rate, the Swiss authorities said Switzerland had maintained a "very constructive stance from the outset" during "intensive" talks.

The U.S. recorded a $38.3 cardinal commercialized shortage with Switzerland erstwhile accounting for goods, and a $29.7 cardinal surplus successful the services realm past year, according to the Office of the United States Trade Representative.

The looming tariffs are expected to not lone deed Swiss companies, but concerns person besides emerged astir the wider interaction connected the country's economy.

Quarterly economical maturation has remained somewhat muted for immoderate time, with gross home merchandise expanding by 0.5% successful the archetypal 4th of 2025.

Swiss ostentation has besides agelong been astatine debased levels, adjacent turning antagonistic earlier this year. In July, the user terms scale came successful astatine 0.2% compared with the aforesaid period a twelvemonth earlier.

As agelong arsenic pharmaceutical products — which are cardinal Swiss exports — are not affected by tariffs, their interaction connected economical maturation whitethorn beryllium limited, Adrian Prettejohn, Europe economist astatine Capital Economics, told CNBC.

"We estimation that the existent tariff complaint of 39%, but with exemptions for pharmaceutical products, would trim GDP by astir 0.6% successful the mean term. While this is significant, it is not catastrophic, so it is equivalent to astir lone 3 months of economical growth," helium explained.

However, Trump besides told CNBC successful Tuesday's interrogation that a sector-specific tariff connected pharmaceuticals could spell arsenic precocious arsenic 250% wrong the adjacent 18 months.

U.S. duties connected pharma imports would beryllium a large stroke to Switzerland, a large hub for the planetary pharmaceutical industry. In 2023, the beingness sciences assemblage contributed 38.5% of Swiss exports.

The sector-specific duties would "likely "take the aggregate interaction of US tariffs connected Switzerland's GDP to implicit 1% and perchance arsenic overmuch arsenic 2%," Prettejohn said.

"Pharma is by acold the astir important export for Switzerland," Torsten Sauter, caput of Swiss equity probe astatine Kepler Cheuvreux, said successful a enactment connected Monday. "Here, Switzerland has leverage via US pharma reliance, but it indispensable tread cautiously — 1 misstep could trigger a devastating 39% tariff connected its astir invaluable sector."

Beyond Trump's tariffs, request for the Swiss franc is besides adding to Switzerland's economical and diplomatic woes.

Since the opening of the year, the currency — typically seen arsenic a harmless haven plus successful times of uncertainty oregon marketplace turbulence — has gained astir 11% against the U.S. dollar. Its surging value has been weighing connected inflation, prompting the Swiss National Bank to reduce its cardinal involvement complaint to 0% successful June.

Swiss Franc/U.S. dollar

Swiss exporters are present facing a "triple blow" of problems, said Kepler Cheuvreux's Sauter successful his enactment connected Monday.

"Steep tariffs … [would] travel connected apical of a anemic USD/CHF currency pair, and a competitory disadvantage compared to neighbouring countries," helium explained.

The European Union precocious secured a woody with the Trump administration that volition spot a broad 15% tariff imposed connected goods the bloc exports to the U.S. — a importantly little complaint than Switzerland faces.

Kamal Sharma, G10 FX strategist astatine Bank of America, told CNBC connected Wednesday that Trump's commercialized policies were putting the Swiss National Bank successful "a very, precise hard situation."

"I deliberation the large contented is that from a rates perspective, the marketplace is present starting to get a small spot much concerned, due to the fact that antagonistic [rates] is thing that's ever connected the horizon," helium said. "There is immoderate interest that if the U.S.-Swiss commercialized woody stays arsenic it is, it means it's going to property the SNB into further accommodative action."

In the past antagonistic rates person done small to summation ostentation and weaken currencies, and are besides improbable to cushion a tariffs blow, Sharma said.

"The much nonstop effect that the SNB could instrumentality is to say, look, we request to offset this by engineering immoderate currency depreciation, and what that does is that it brings involution backmost into play. So involution present is much apt than it was before," the strategist added.

But that isn't an casual determination for Swiss policymakers to make. SNB involution successful the overseas speech marketplace led to Switzerland being labeled a currency manipulator during Trump's archetypal term, and earlier this twelvemonth the state was added to a "Monitoring List" of trading partners "whose currency practices and macroeconomic policies merit adjacent attention."

Trump's tariff argumentation besides takes into relationship immoderate "currency manipulation and commercialized barriers." Swiss officials person denied accusations of deliberately devaluing the Swiss franc against the greenback.

However, BoA's Sharma said that the SNB is apt to plow up with currency intervention, adjacent if it "may further incur the wrath of the U.S. administration."

"In immoderate ways, [they've] got thing much to suffer … they person to commencement reasoning astir Swiss industry."