The United States has decided to impose a high reciprocal tariff of 39% on Switzerland, higher than the previous 31%. Reports indicate that the background to this decision is Switzerland's lack of sincerity in addressing the trade imbalance with the United States.
According to Bloomberg on August 2 (local time), U.S. President Donald Trump and Swiss President Karin Keller-Sutter held a phone call on July 31, just 10 hours before the trade agreement deadline set by President Trump. If the agreement had not been reached, a 31% reciprocal tariff would have been imposed on Switzerland.
According to a Swiss government official, President Trump criticized Switzerland during the call, saying that Switzerland's annual trade surplus with the United States, which amounts to $40 billion (56 trillion won), is akin to "theft." He demanded that Switzerland take measures to address this issue. However, when President Keller-Sutter failed to present any proposals that could help resolve the trade imbalance, President Trump became enraged. It is reported that a few hours later, he decided to impose a 39% reciprocal tariff rate on Switzerland starting August 7.
This is even higher than the 31% announced by President Trump on April 2. If implemented, Switzerland would be at a much greater disadvantage compared to European Union (EU) member states, which have a tariff rate of only 15%.
Bloomberg reported, "It was unexpected for Switzerland that Trump focused exclusively on the trade deficit issue during the call, disregarding topics such as services, foreign investment, and Switzerland's cooperation proposals." The working-level officials from both countries had already drafted a trade agreement in early July, and not only the Swiss government but also U.S. Treasury Secretary Scott Besant and U.S. Trade Representative (USTR) Jamison Greer had agreed to the draft. Therefore, the Swiss side mistakenly believed that President Trump's final approval would be a mere formality.
Bloomberg commented, "Switzerland faced the harsh reality that no agreement is finalized until Donald Trump, the U.S. President, gives direct approval, as seen in the last-minute call." According to a White House official who requested anonymity, the outcome of the call was due to Switzerland's refusal to make meaningful concessions on trade barriers. The official explained that for very wealthy countries, it is impossible to reach an agreement without concessions on key issues.
As a result, the Swiss pharmaceutical industry, which accounts for 60% of Switzerland's exports to the United States, is expected to be inevitably affected. In particular, apart from the tariffs, the Trump administration is putting strong pressure on drug price reductions, causing the Swiss pharmaceutical sector to face serious dual challenges.
It was initially reported that the draft agreement included a provision exempting major Swiss pharmaceutical companies from tariffs when exporting medicines to the United States. However, in an interview with Bloomberg TV on August 1, U.S. Trade Representative Greer announced a policy to impose tariffs on Swiss pharmaceuticals and encourage domestic production of medicines in the United States.
Not only companies selling Swiss luxury watches such as Rolex, Patek Philippe, and Omega in the United States, but also consumers and distributors have been greatly shocked. According to the Associated Press, the Federation of the Swiss Watch Industry expressed that it was "very disappointed and surprised" by the U.S. decision to impose a 39% tariff on Swiss products.
President Trump has worn various Swiss luxury watches such as Rolex, and many of his family members and Trump administration officials have done the same. Oliver Mueller, a consultant in the Swiss luxury watch sector, lamented to a Bloomberg reporter, "Above all, he (President Trump) likes Swiss watches!" He predicted that if the tariffs are imposed as planned, retail prices in the U.S. will increase by 12 to 14%.
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