Swiss flag concerns over Trump’s US tariff hike proposals

8:45 am Tuesday, November 19th, 2024

By John Revill

BERN (Reuters) – Switzerland said on Tuesday it was concerned by U.S. President-elect Donald Trump’s proposals to raise tariffs and is considering how to respond if his new administration does so.

Trump aims to shift the aggressive trade agenda from his first term into higher gear with across-the-board 10% tariffs on imported goods and even higher levies on imports from China.

That could hurt the export-oriented Swiss economy, which has the United States as its biggest market, experts say. Around a fifth of Swiss exports of goods currently go to the United States, customs data shows, making the country a more important market for Switzerland than Germany, China or France.

“Switzerland is concerned about Donald Trump’s announcement to impose additional tariffs on all goods imported in to the U.S.” a spokesman for the Swiss State Secretariat for Economic Affairs (SECO) said on Tuesday.

“Switzerland clearly rejects the plans,” they said of the proposals, adding they contravene the rules-based international trading system which is crucial to the Swiss economy.

SECO said Bern was examining “sensible responses” and seeking discussions with the relevant U.S. authorities, as well as counterparts in Germany, France, Italy and the EU.

SECO did not give details on what responses were being considered, although Switzerland’s leeway could be restricted after it scrapped all industrial tariffs this year.

Currently the U.S. has low single-digit tariffs on the import of industrial goods, with many Swiss industrial exports to the U.S. duty-free.

While experts and central bankers in Europe have warned about the damage from rising trade barriers, governments have so far been cautious on how to respond on Trump’s plan.

Economists have estimated that Swiss economic output could be reduced by 1% if severe amplification effects like a trade war broke out or companies started relocating to avoid tariffs.

The Swiss pharmaceutical industry, manufacturers of machinery, appliances, precision instruments, watches and foodstuffs, for example, would suffer significantly from higher tariffs, economists at the ETH university in Zurich have warned.

Other countries have also warned about fall-out from tariffs, with Bundesbank President Joachim Nagel saying earlier this month that Germany’s economy could lose 1% in economic output.

(Reporting by John Revill; Editing by Dave Graham and Alexander Smith)