U.S. stuns Switzerland with 39% tariff — but new deadline provides hope

Switzerland is officially connected vacation Friday for the country's nationalist day. But galore marketplace watchers have been hauled backmost to their desks by quality overnight that they person been deed with a 39% tariff complaint by the White House.

That came arsenic a daze to the Alpine nation. Indications successful the Swiss property had been that the state was adjacent to negotiating an outline woody akin to those struck by the European Union, the U.K. and Japan, which acceptable baseline tariffs betwixt 10% and 15%. Instead, it has received 1 of the highest rates of immoderate country.

That is hugely significant, with the U.S. accounting for astir a sixth of Switzerland's full exports. Businesses breathed a motion of alleviation successful April erstwhile the state swerved archetypal plans for a 31% tariff, being handed an interim 10% work on with astir of the world.

As of precocious Thursday, caller tariff rates connected a dozens of countries that person not yet agreed a model commercialized statement with the U.S. are acceptable to travel into unit from Aug. 7. Given the precedent acceptable by U.S. President Donald Trump for last-minute deadline changes and down-to-the-wire deals, that does permission country for the concern to change.

Another imaginable reprieve came arsenic the Swiss Federal Department of Economic Affairs told Reuters connected Friday it understands the 39% tariff volition not see the pharmaceutical sector, which is separately facing volatility from Trump's latest comments connected cause pricing. CNBC has contacted the White House for comment.

Amid the uncertainty, reactions were overwhelmingly antagonistic connected Friday.

Switzerland's national council said it had "great regret that, contempt the advancement made successful bilateral talks and Switzerland's precise constructive stance from the outset, the US intends to enforce unilateral further tariffs connected imports from Switzerland." It added that it continued to question a "negotiated solution" and was successful interaction with U.S. authorities.

Manufacturing relation Swissmem said a 39% tariff would deed the tech industry, exports and truthful the full state "extremely hard," noting that each 2nd franc brought into the system was made from overseas trade.

"I americium stunned. These tariffs are based connected nary rational ground and are arbitrary. This determination puts tens of thousands of jobs successful the manufacture astatine risk," the group's manager Stefan Brupbacher said.

Beat Wittmann, president and spouse astatine Porta Advisors, said the quality delivered a "devastating" stroke to the Swiss system and businesses.

"The U.S. leads a zigzagging unilateral warfare connected tariffs and this unpredictability imposes a rising hazard premium connected fiscal assets," helium said successful emailed comments. "This volition pb to a weakening of the Swiss economy, the Swiss Franc and the Swiss equity market, peculiarly the all-important export sector."

The Swiss authorities needs to admit that the clip for "cherry picking, carve outs and peculiar deals" is over, peculiarly for small, highly-exposed states, Wittmann added.

Key Swiss exports see chemic and pharmaceutical products, watches and jewellery, chocolate, gemstones and electronics.

Adrian Prettejohn, Europe economist astatine Capital Economics, said successful a enactment that a 39% tariff complaint would sound astir 0.6% disconnected Switzerland's GDP, oregon much with the inclusion of pharmaceuticals — but that helium expected it to beryllium negotiated down.

With the Swiss banal marketplace closed for nationalist day, indicators are alternatively feeding done different avenues specified arsenic the show of London-listed Watches of Switzerland, which fell astir 9% successful greeting deals.

In a Friday enactment to clients, analysts astatine concern slope Jefferies cited the company, on with Richemont and Swatch Group, arsenic among those that would instrumentality the biggest hits from the news, peculiarly comparative to erstwhile expectations.

However, they added that the Aug. 7 commencement day allowed for "plenty of past infinitesimal tweaks and changes to beryllium agreed."

U.S. dollar vs Swiss franc.

The Swiss franc meantime slid astir 0.4% against the U.S. dollar connected Friday.

However, that comes aft a immense rally successful the franc against the greenback this year, with gains of astir 11% arsenic investors hunted for safe-haven assets. That has delivered challenges to the economy, which successful May marked a instrumentality to deflation for the archetypal clip since the Covid-19 pandemic — spurring the Swiss National Bank to cut involvement rates to zero successful June.

Rahul Sahgal, CEO of the Swiss-American Chamber of Commerce, told CNBC's "Squawk Box Europe" the tariff quality was "very disappointing" aft galore rounds of negotiations with the U.S. Treasury Department.

"I person to say, however, that I anticipation and I bash not deliberation that it is the end," helium said.

"We person still, firstly, those days till the 7th of August, and also, if you work the enforcement order, it does permission a definite model open, let's enactment it that way, saying that if you are successful negotiations with the U.S. these further tariffs whitethorn not apply."

One constituent of previously-struck deals is simply a committedness to summation concern successful the U.S., which successful the lawsuit of the EU is set to full $600 billion on with hundreds of billions successful further vigor purchases. On this, Sahgal said Switzerland was looking successful the scope of a $150 cardinal concern pledge, which was 1 of the biggest comparative to the size of its economy. The state is already the sixth largest wide capitalist successful the U.S., helium added.

Sahgal continued that it was hard to accidental what the sticking constituent successful negotiations had been oregon however the 39% complaint had been calculated, noting that crossed some goods and services the commercialized narration betwixt Switzerland and the U.S. was balanced — but that Trump was lone focused connected the former.

"Switzerland is simply a country... of 9 cardinal people, and the U.S. has thing similar 30 cardinal people. So adjacent if... each Swiss was to portion a vessel of bourbon and devour a steak each azygous time and bargain a Harley Davidson, we would not beryllium capable to equilibrium the commercialized successful goods," helium said.

— CNBC's Carolin Roth, Sophie Kiderlin and Ganesh Rao contributed to this story.