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Swiss Economy Struggles as U.S. Tariffs Threaten Growth

Swiss Economy Struggles as U.S. Tariffs Threaten Growth

Switzerland, known for its stability and strong export-driven economy, is now facing a serious challenge. The country’s growth has slowed sharply, falling from 0.7 percent in the first quarter of 2025 to only 0.1 percent in the second quarter. Economists warn that the slowdown is largely caused by new U.S. tariffs, which are higher for Switzerland than for other nations. This has created fresh uncertainty for businesses, workers, and policymakers.

Impact of U.S. tariffs on Swiss exports and trade relations

The United States imposed a steep 39 percent tariff on Swiss goods in early August 2025. In contrast, the tariff on European Union goods is 15 percent, and on British goods just 10 percent. Switzerland’s higher rate reflects unresolved trade disagreements and political tensions.

Impact of U.S. tariffs on Swiss exports and trade relations
image source: Reuters.com

Exports are the backbone of the Swiss economy. Luxury watches, precision machinery, cheese, and chocolates are popular products in the American market. But with tariffs driving up costs, U.S. customers may now look for cheaper alternatives. Watchmakers, food producers, and engineering companies are particularly exposed. For the time being, the pharmaceutical sector has been spared, but any extension of tariffs into that area could have severe consequences.

Swiss watchmakers and food industries hit by rising costs

The luxury watch industry, represented by global names like Rolex and Patek Philippe, is especially worried about losing its strong U.S. base. These products are already expensive, and tariffs have made them even harder to sell abroad. Swiss cheese and chocolate, symbols of the country’s culture, are also becoming less competitive in American supermarkets. Machinery and engineering firms, which contribute heavily to Switzerland’s industrial exports, are facing shrinking demand.

Research from the KOF Economic Research Institute in Zurich shows that tariffs could reduce Switzerland’s GDP by around 0.6 percent. While this figure may seem small, for a small but wealthy country, it means billions of francs in lost output. The threat to jobs is equally concerning.

Swiss companies seek alternatives to survive tariff pressure

Some Swiss companies have already begun searching for solutions. Victorinox, the maker of the famous Swiss Army knife, has said it may shift part of its production to the United States to avoid tariffs. Other firms are considering moving certain operations to European Union countries where trade conditions are easier .

Swiss companies seek alternatives to survive tariff pressure swiss economomy us tarrifs
image source: Getty Images

The Swiss government is also revising its trade proposal for future negotiations with Washington, aiming to include deeper defense cooperation, stronger energy ties, and expanded market access for U.S. goods especially American liquefied natural gas.

Swiss National Bank response to strong franc and tariff shock

The Swiss National Bank is facing pressure as the franc continues to rise against the U.S. dollar. The currency has gained more than 12 percent in recent months, making Swiss goods even more expensive abroad. To ease the pressure, the central bank has converted part of its U.S. dollar reserves into euros

Swiss business leaders and industry groups are calling the tariffs unfair and damaging. Economistic, the country’s main business federation, has described the U.S. decision as unjustified and warned that it could create a heavy burden for companies.

Switzerland prepares for an uncertain economic path

Economists say Switzerland faces a triple challenge: the immediate impact of high tariffs, the strength of the franc, and weaker global demand. Each of these problems adds pressure to an already fragile growth outlook. If Switzerland can secure a trade deal with the United States, the damage may be limited.

At a time when global trade is becoming more protectionist, Switzerland must now carefully adapt. Known for precision and stability, the country is entering a period where economic flexibility and diplomatic skill will be just as important as its famous exports.

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