Travelling to Switzerland? Shopping may cost more as Donald Trump imposes 39% tariff

Mint

4 days ago

Prices for the eponymous Swiss watches, Swiss chocolate and Swiss cheese could skyrocket in a week as a result of US President Donald Trump's trade war.
Switzerland, home to some the world's most recognisable luxury brands, now faces an upcoming 39 per cent tariff from the US Industry groups on Friday warned that both Swiss companies and American consumers could pay the price.
Trump signed an executive order Thursday placing tariffs on many US trade partners — the next step in his trade agenda that will test the global economy and alliances — that's set to take effect next Thursday. The order applies to 66 countries, the European Union, Taiwan and the Falkland Islands.
In Switzerland, officials failed to reach a final agreement with the US after Trump initially threatened a 31 per cent tariff in April. Swiss companies will now have one of the steepest export duties — only Laos, Myanmar and Syria had higher figures, at 40-41 per cent. The 27-member EU bloc and Britain, meanwhile, negotiated 15 per cent and 10 per cent tariffs, respectively.
The Swiss government spent Friday — the country's National Day — reeling from the news. Swiss President Karin Keller-Sutter said that the 39 per cent figure was a surprise, because negotiators had hashed out a deal last month with the Trump administration that apparently wasn't approved by the American leader himself.
'We will now analyze the situation and try to find a solution," Keller-Sutter told reporters. 'I can't say what the outcome will be, but it will certainly damage the economy.'
The US goods trade deficit with Switzerland was USD 38.5 billion last year, a 56.9 per cent increase over 2023, according to the Office of the United States Trade Representative. Keller-Sutter said that she believes Trump ultimately chose the 39 per cent tariff, because the figure rounded up from the USD 38.5 billion goods trade deficit.
'It was clear that the president was focused on the trade deficit and only this issue,' she said.
For Swiss watch companies, whose products already come with price tags in the tens of thousands — if not the hundreds of thousands — of euros, a timepiece for an arm could cost a leg, too, come next week.
The 39 per cent figure was especially galling to the Federation of the Swiss Watch Industry, because Switzerland in 2024 got rid of import tariffs on all industrial goods.
'As Switzerland has eliminated all custom duties on imported industrial products, there is no problem with reciprocity between Switzerland and the US,' the federation said in a statement. 'The tariffs constitute a severe problem for our bilateral relations.'
Swiss watch exports were already facing a prolonged slowdown, with significant declines in the United States, Japan and Hong Kong, according to the federation's June figures, the most recent available.
Swatch and Rolex declined to comment Friday. Representatives for Patek Philippe, IWC and Breitling didn't respond to requests for comment.
Multinational chocolatiers Nestlé and Lindt & Sprüngli said they have production lines in the US for American customers. But small- and medium-sized Swiss companies are predicted to suffer under the tariffs.
Roger Wehrli, chief executive of the Association of Swiss Chocolate Manufacturers. also known as Chocosuisse, said Switzerland exports 7 per cent of its chocolate production to the US.
It's not just the 39 per cent tariff that's the issue. Once the manufacturers factor in the exchange rate between US dollars and Swiss francs (USD1 to 1.23 francs on Friday), Wehrli said, it's close to a 50 per cent increase in costs for the Swiss companies. And that's a big number to pass on to American consumers, if the already-slim margins aren't further reduced.
'I expect that our industry will lose customers in the United States, and that sales volumes will decrease heavily,' he told The Associated Press.
Wehrli said that he wants Swiss chocolatiers to sell to other markets around the globe to make up the difference. Still, he hopes American customers remember that Swiss quality beats cheaper quantity.
'I think even if prices for Swiss chocolate increase due to the very high tariffs, I think it's worth (it) to buy Swiss chocolate," he said. 'It's worth (it) to really eat it consciously and to really enjoy it instead of eating a lot.'
Swiss pharmaceuticals powerhouse Roche says that it's working to ensure its patients and customers worldwide have access to their medications and diagnostics amid the Trump tariff war.
'While we believe pharmaceuticals and diagnostics should be exempt from tariffs to protect patient access, supply chains and ultimately future innovation, we are prepared for potential tariffs being implemented and confident in managing any impacts,' the statement said.
The company in April announced that it plans to invest $50 billion in the United States over the next five years, creating 12,000 jobs. The company already employs more than 25,000 people in the US.
Meanwhile, Novartis, another major Swiss pharmaceutical firm, said in a statement that it was reviewing Trump's executive order.
'We remain committed to finding ways to improve access and affordability for patients,' it said.