The Swiss government is trying to negotiate a trade agreement with the United States, while its exports are threatened by customs duties of 39% from August 7.
Emergency meeting of the federal government, consultations with businesses, the Swiss authorities sounded the fight to try to find a response to Donald Trump’s threat to assemble 39% of punitive customs duties to the products of the small alpine country.
The Swiss government must meet this Monday, August 4, in videoconference for an extraordinary session, according to the federal chancellery. The State Secretariat for Economy also spoke with various representatives of the Swiss economy, he said, without disclosing the content of the discussions.
The government has also announced that it wanted to continue negotiations with the United States on customs duties, “if necessary beyond August 7”, by approaching this new phase of discussions “with the desire to present a more attractive offer”. The Swiss government is “determined to continue discussions and negotiations”, taking into account the concerns of the United States, “the executive said in a statement after a crisis meeting.
39% surcharge instead of the 31% planned
Switzerland is sounded by the decision of the American administration, which noted customs duties for Swiss products imported into the United States at 39% from August 7, against 31% initially announced in early April.
The decision made the Alpine country which had immediately chosen the negotiations with the United States after this Donald Trump called “Liberation Day” (Liberation Day) in early April.
According to Karin Keller-Sutter, the president of the Confederation, the American president Donald Trump has the impression that Switzerland “steals” the United States in view of a trade deficit of nearly 40 billion Swiss francs (42.8 billion euros). The Federal Council (Government) – which says that it has learned with great regret this surcharge by 39% – hopes to be able to use the few days of respite before the deadline of August 7 to negotiate concessions.
At the opening on Monday, the Swiss scholarship accused the blow, losing 2% in the first exchanges, before gradually catching its losses. At 11:14 GMT, the SMI, the reference index of the Swiss Stock Exchange, lost 0.65% to 11,759.03 points, with however a certain feverishness within the high values of the index which evolve erratically.
A threat to the profits of Swiss companies
This surcharge, much higher than the 15% imposed on competitors based in the European Union, is a major issue for the Swiss economy, the large unknown being the treatment reserved for pharmaceutical products, which represent “more than half” of Switzerland exports, recalled Hans Gersbach.
According to this professor of economics, deputy chief of the Center for Conditional Research Center of the Zurich Federal Polytechnic School, these customs duties at 39% could cost between 0.3% and 0.6% annual growth in Switzerland, but the impact on gross domestic product could climb to “at least 0.7%”, according to the fate reserved for pharmaceutical products, so far exempt from customs rights.
The American president also seeks to put pressure on large pharmaceutical groups to lower the price of medicines, which adds an additional unknown.
In a market note, Vontobel analysts emphasize that these 39% receive in particular certain sectors, such as watchmaking since watches are manufactured in Switzerland, or part of the machine manufacturers.
According to them, there is “there is hope that an agreement” can be concluded and brings customs duties to a level “closer to the 15%” applied to other countries. “However, if these 39% customs rights remain in place”, the benefits of companies in these sectors could be “substantially affected”, they warn.
“A blow” for Swiss chocolate makers
Chocosuisse, the employers’ organization of chocolate manufacturers, these 39% customs duties are “a blow” which runs the risk that Swiss products decrease on the shelves in the United States and that those who remain “see their price increase”. This employers’ organization called on the government to “do not let go of the song” and to “pursue negotiations”.
Among the negotiation levers, the Sunday press mentioned the gold trade, which has the effect of inflating Switzerland’s trade surplus vis-à-vis the United States. Switzerland is home to many refineries, where bruises are melted for most of the United Kingdom in order to redesign them to American standards.
These gold exchanges therefore lead to a statistical distortion in trade, according to the Sunday newspaper Sonntagzeitung, which suggests recalling that they give the impression that Switzerland exports more to the USA than it actually does.