The United States and Switzerland have reached an agreement to reduce 39% tariffs imposed by US President Donald Trump last summer, US Trade Representative Jamieson Greer announced on Friday. “In essence, we have reached a (trade) agreement with Switzerland,” Greer told CNBC. The details of the agreement are still unknown. “They will move a significant portion of their production to the United States: pharmaceutical products, gold smelting, and railway equipment,” Greer added.
After months of negotiations, in which the government of the small but wealthy European country sought to tempt Republicans with improvements to its offer, the agreement would leave tariffs at 15%, the same percentage supported by the European Union or Japan.
Trump signaled the change in direction last Monday, when reporters in the Oval Office asked him about the negotiations. The US President noted: “We hit Switzerland hard, (but) we want it to continue to succeed.” He also said he was “basically a good ally.”
Since the United States is the main trading partner, the Swiss sell in that market mainly pharmaceutical products – negotiations with these manufacturers have taken a second track – chemicals, fine metals, gold – which is refined in Switzerland – watches, machinery and precision instruments, the latter sectors being among those most affected by trade prices. Cheese or chocolate exports also suffered the blow of tariffs.
According to Swiss and American media, in order to reach an agreement, the Swiss government supposedly promised, among other things, to buy more weapons from the United States, provide American energy companies with access to their markets and move pharmaceutical factories to the United States. Big pharmaceutical companies have already announced multi-million dollar investments in American territory and their willingness to reduce drug prices, as Trump demanded.
Giant companies like Roche or Novartis already produce or plan to do so in the United States. This is a step taken by pharmaceutical companies around the world under pressure from Trump. Ten pharmaceutical companies have committed to investing more than $350 billion by the end of the decade in the United States.
Negotiations were also undertaken to transfer activities related to gold processing to the United States, an activity that affected Washington’s unfavorable trade deficit.
Trump’s flip-flops on tariff policy sent Switzerland (nine million people) on a rollercoaster ride that began with a 31% penalty announced on April 2, the day the American millionaire was baptized as “governor.” Liberation day. On that day, Trump demolished with a crude poster the usages and customs of international trade that countries had built up after decades of diplomacy.
That trade war was suspended shortly after by Republicans when they saw the backlash from the markets. Therefore, he decided to open bilateral negotiations with each country. Bern reached a tentative agreement in July with trade officials in Washington to keep tariffs at around 10%, according to Swiss media at the time, but Trump’s blessing was absent.
This did not arrive. Switzerland woke up on August 1, National Day, to a 39% penalty and was among the countries with the highest taxes, after Brazil, India, Myanmar, Laos and Syria.
As in other cases, Trump imposed the so-called reciprocal tariffs because he considered “a direct loss caused by the Swiss” to be the large US trade deficit with the Alpine Union, which amounted to about $38.5 billion (about 33 billion euros) last year, ignoring, among other things, that almost 99% of US products have free access to the Swiss market or that the trade balance in services is favorable to Washington.
During recent negotiations, the Swiss federal government gave more prominence to Economy Minister Guy Parmelin, after Trump publicly bashed the president, Karin Keller-Souter, in August, whom he described as “a nice lady, but she doesn’t want to listen.” Bern has also turned to heavyweights in its industry and economy to foster rapprochement with Washington. A delegation including Rolex CEO Jean-Frédéric Dufour recently visited Trump in the Oval Office. Many international media outlets, including the BBC, reported that the US President received a Rolex watch for his office and a gold bar, something that the companies did not want to confirm.
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