Trump’s massive 39% tariff on Swiss goods

On August 7, 2025, a sweeping 39% tariff on Swiss exports to the United States comes into effect, announced by former U.S. President Donald Trump. This major tariff shake-up threatens Switzerland’s most important industries, including its world-renowned watchmaking sector, pharmaceutical giants, and key food exporters like Nestlé. 

The announcement of US tariffs on Swiss products has caused a profound shock, making it seem almost impossible to negotiate a reasonably acceptable lower customs rate. Additionally, Switzerland could face even tougher challenges if sectoral duties on pharmaceuticals are imposed. This situation is expected to adversely affect Swiss economic growth, mainly because Switzerland faces disadvantage relative to European Union members and the UK. 

Despite this, the Swiss National Bank (SNB) maintains its reduced forecast for GDP growth at 1.3% in 2025 and 0.9% in 2026. No further reductions in growth forecasts are deemed necessary for now unless further negative developments occur, such as tariffs on pharmaceuticals. The tariffs also impact monetary policy; Raiffeisen experts note an increased risk that the SNB might lower the key interest rate (currently at 0.0%) into negative territory again, should the economic outlook worsen, deflation risk rise, or the Swiss franc appreciate significantly.

The SNB's ability to intervene in the foreign exchange market has also been constrained by the trade dispute with the US, as such actions could draw further scrutiny from Washington. These factors collectively increase the likelihood of negative interest rates being reinstated in Switzerland.

Why the 39% Tariff?

Because the United States imports significantly more goods from Switzerland than Switzerland imports from the U.S., Switzerland runs a substantial trade surplus with the U.S., which is a key factor behind the recent tariff imposition.

This unprecedented tariff aims to tackle perceived trade imbalances and to boost U.S. manufacturers’ competitiveness. However, the sudden scale and severity have caught the Swiss government and industry off guard, launching urgent negotiations to soften or overturn the tariff before the deadline.

How about pharmaceuticals?

Pharma leaders Novartis and Roche face uncertain waters. While some pharma goods may be exempt from reciprocal tariffs, the wider trade tension risks disrupting supply chains, increasing costs, and complicating drug pricing pressures in the lucrative U.S. market.

The top Swiss pharmaceutical exports to the United States include blockbuster drugs and biologics like Novartis’s Entresto (heart failure) and Roche’s Avastin (cancer) and Hemlibra (hemophilia), which together contribute to over $15 billion in exports annually. Alongside these, vaccines and blood-related products account for approximately $20 billion in shipments. These high-value medicines represent the majority of Switzerland’s pharmaceutical exports to the U.S., underscoring the critical role of innovative Swiss therapies in bilateral trade.

And coffee pods?

Switzerland’s food exporters like Nestlé will feel the tariff’s effects, particularly on Swiss-made coffee capsules like Nespresso sold in the U.S. Nestlé’s executives have acknowledged that while most of their U.S.-sold products are locally manufactured, the Swiss-made Nespresso pods will be directly affected, and price increases are among the possible measures being considered to offset the tariff impact. This could reduce demand or push Nestlé to explore moving some production closer to the U.S. to mitigate costs.

What about tech?

Beyond watches, pharma, and food, sectors including precision instruments, medical devices, and electronics face significant risks. Companies such as Victorinox and Logitech must prepare for higher costs and potential supply chain disruptions, posing threats to jobs and innovation.

The most exported Swiss medical devices to the U.S. market in 2024 fall primarily into the category of in vitro diagnostics and laboratory supplies. These products include advanced diagnostic instruments and test kits widely used in clinical laboratories. This category leads Swiss medtech exports, representing a significant share of the sector’s overall CHF 23.4 billion revenue in 2023, with exports growing steadily in recent years.

Negotiation and urgency

Swiss leaders are racing against the clock to propose a ‘more attractive’ trade deal to lift or ease the tariff burden. Domestic support measures for affected industries and workers are meanwhile under consideration to help mitigate economic damage.

The 39% tariff imposed by Trump marks a pivotal moment in Swiss-U.S. trade relations, with profound implications for exports, industry competitiveness, and bilateral diplomacy. The coming weeks will be crucial in shaping the future landscape for Swiss industry in the world’s largest consumer market.