Trump Will Impose 39% Tariff Rate On Imports From Switzerland

President Donald Trump will impose a 39% levy on imports from Switzerland, according to an executive order he signed Thursday night.

Switzerland was among the countries that have not yet finalized trade frameworks with the US before the Aug. 1 deadline for so-called reciprocal tariff rates to take effect.

The outcome is higher than the 31% tariff rate Trump initially threatened to levy in April when he unveiled duties on dozens of trading partners, only to hold off to allow time for negotiations. That negotiating period was set to end earlier in July and was extended again to August as Trump only secured a handful of agreements.

The rate on Swiss exports to the US is markedly higher than other trading partners who were able to negotiate frameworks with the US, such as the European Union, Japan and South Korea receiving 15% levies.

Trump in his second term has carried out a sweeping tariff agenda aimed at pressuring countries and industries to reshore manufacturing in the US and to reduce global trade imbalances. The US had a $38 billion trade deficit with Switzerland last year, just outside a ranking of top 10 trading shortfalls.

The country had been a priority in international negotiations and had hoped to be among the first to clinch a deal.

The impact of additional tariffs Trump has threatened on the pharmaceutical industry remain uncertain. The Swiss economy rests on large contributions from industry giants Novartis AG and Roche Holding AG.

Trump’s tariff rate comes despite months of high-stakes diplomacy intended to complete an agreement, negotiations that forced Bern to balance its commitment to global openness against the protection of domestic agriculture. The industry represents less than 1% of the economy but commands out-sized political influence, and farmers’ lobbyists had threatened to fight any settlement affecting Swiss high-tariff barriers in the area.

Trump’s April 2 tariff announcement had put Switzerland’s exporters in a double bind as it also caused a sharp Swiss franc appreciation. That prompted the Swiss National Bank to cut interest rates to zero after it had previously signaled it was done with easing.

President and Finance Minister Karin Keller-Sutter expressed careful optimism at the end of June that the nation would be able to secure a deal, saying American officials had accepted that Switzerland doesn’t manipulate its currency. During Trump’s first term, the Treasury Department had put the country on a list of jurisdictions it accused of doing so.

Source: Bloomberg