US stunning Switzerland with 39% tariff but a new deadline provides hope

Switzerland is officially on Friday’s vacation for National Day. But many market observers have been drawn back to their desks of the news overnight that they have been hit by a 39% tariff rate of the White House.

This came as a shock to the alpine nation. The testimony in the Swiss press was that the country was close to negotiating a deal with contours similar to those affected by European Union., Britain and Japanwhich determine the basic rates between 10% and 15%. Instead, he has received one of the highest of every country.

This is extremely important, with the US being about six of Switzerland’s total exports. The business was breathable a sign of relief in April, when the country rotated initial plans for a 31% tariff, giving it a temporary 10% debt along with the bigger part of the world.

By the end of Thursday, a new tariff rates for dozens of countries who have not yet agreed that the Framework Trade Agreement with the US will enter into force on August 7. Given the precedent determined by US President Donald Trump for The last -minute deadline changes And transactions with the current, this leaves room to change the situation.

Another potential withdrawal came when the Swiss Federal Department of Economic Affairs told Reuters on Friday that he realized that the 39% tariff would not include the pharmaceutical sector, which is separate Faced with the unstable Trump’s latest comments about drug pricingS CNBC contacted the White House for comment.

Switzerland’s Federal Council said There was a great regret that despite the progress achieved in bilateral conversations, and Switzerland’s very constructive position from the beginning, the United States intends to impose unilateral additional tariffs for imports from Switzerland. ” He added that he was still looking for a “agreed solution” and is in contact with the US authorities.

The Swissmem Production Association said the 39% tariff would hit the technology industry, exports, and therefore the whole country “extremely difficult”, noting that every second franc inserted into the economy was made by foreign trade.

“I’m stunned. These tariffs are based on a rational basis and are arbitrary. This solution puts tens of thousands of jobs in the industry,” said group director Stefan Brupsbacher.

Beat Wittmann, chairman and partner at Porta Advisors, said the news made a “devastating” blow to the Swiss economy and business.

“The United States is waging a cigzing unilateral warfly war, and this unpredictability necessitates a growing risk of premium on financial assets,” he said in comments by email. “This will lead to a weakening of the Swiss economy, the Swiss Frank and the Swiss stock market, in particular from all important export sectors.”

The Swiss government must admit that the time to “pick cherries, carving and special deals” is over, especially for small, highly exposed countries, Vitman added.

The main Swiss exports include chemical and pharmaceuticals, watches and jewelry, chocolate, precious stones and electronics.

Adrian Pettychon, an economist in Europe at Capital Economics, said in a note that a 39% tariff rate will collect about 0.6% of Switzerland’s GDP or more with the inclusion of pharmaceuticals – but it expects to be agreed.

After the Swiss stock market is closed to national day, indicators feed on other roads, such as presenting the list of London Switzerland watcheswhich fell nearly 9% in morning deals.

On Friday a note to customers analysts at the Jefferi Investment Bank quoted the company, along with Richemont and Swatch GroupAs among those who would take the biggest hits from the news, especially according to previous expectations.

However, they added that the start date on August 7 is authorized for “many last minute pinnacle and changes that need to be agreed”.

Meanwhile, the Swiss Frank slid about 0.4% compared to the US dollar on Friday.

However, this comes after a huge rally in the franc against Greenback this year, with profits of about 11%as investors hunted for assets for safe asylum. It’s Delivered challenges to the economywhich in May marks a return to deflation for the first time after the Covid-19-stimulate Swiss National Bank to Reducing interest rates to zero in JuneS

One of the elements of earlier transactions is an commitment to increase investment in the US, which in the EU case is Set to a total of $ 600 billion together with Hundreds of billions of additional energy purchasesS In this way, Sahgal said that Switzerland was looking for an investment bet of $ 150 billion, which was one of the largest compared to the size of its economy. The country is now the sixth largest investor in the United States, he added.

Sahgal continued that it was difficult to say what the adhesive moment was in the negotiations or how the 39% percent was calculated, noting that both in the goods and in services, the trade relations between Switzerland and the US were balanced – but Trump is focused only on the first.

“Switzerland is a country … out of 9 million people, and the US has something like 30 million people. So even … Every Swiss had to drink a bottle of bourbon and eat steak every day and buy Harley Davidson, we would not be able to balance the trade in goods,” he said.

– Carolyn Roth of CNBC, Sophie Kiderlin and Ganesh Rao have contributed to this story.