Switzerland said it’s one of 15 countries that will get “somewhat preferential treatment,” after agreeing to tariff negotiations with the Trump administration.
Levies will be held at 10% during negotiations, even if they extend beyond President Donald Trump’s 90-day tariff pause, Swiss President Karin Keller-Sutter said in Washington late on Thursday, after meeting with US Treasury Secretary Scott Bessent.
“There is no fixed timetable. But what is clear is that the 90-day deadline would be extended if you are in talks,” Keller-Sutter told reporters. “It’s good that Switzerland is one of the 15 countries that get, yes, somewhat preferential treatment here.”
Keller-Sutter, who is also finance minister, was in Washington to lobby US government officials, after being caught out by the size of reciprocal tariffs on Swiss imports. Trump has already pledged to look again at the 31% levies planned for Switzerland, which were far higher than the 20% slated for the European Union.
The Swiss president also discussed non-tariff trade barriers, subsidies and taxes with Bessent, as concern mounts over the double hit to competitiveness from levies and a soaring currency.
The market uncertainty fomented by Trump’s trade war means investors continue to be lured by the Swiss franc’s safe-haven status. That’s putting pressure on Switzerland’s export-oriented economy, while the central bank’s freedom to intervene to stem franc gains is curbed by fears that the US could brand it a currency manipulator.
“This represents a double shock for Swiss firms exporting to the US,” said Hans Gersbach, deputy head of the KOF economic research institute in Zurich.
At Falu AG, a manufacturer of machines producing cotton swabs and pads, new orders have plummeted as the tariff uncertainty halts investments, said co-owner and Chief Executive Officer Guy Petignat.
“That’s the real poison,” said the CEO, who is preparing to meet clients in the US, which — fluctuating from year to year — accounts for as much as a third of revenue at the company, based at Rueti near Lake Zurich. “With no clarity on where we’re heading, everybody is holding still for three months.”
It’s a crisis that’s comparable to the Covid-19 pandemic, or the Swiss National Bank’s shock scrapping of the franc cap in 2015, according to Petignat.
While the Swiss government dropped its growth forecast for this year, the outlook has so far been softened by Trump’s exemption of pharma — Switzerland’s biggest export — from planned tariffs.
With Trump periodically threatening levies on drugs, that could yet change, but Keller-Sutter was optimistic after meeting with Bessent.
“On this, no statements were made, because no decisions have been made yet,” she said. “I was a little under the impression that it might not happen in the end.”
To forestall the impact, the biggest Swiss pharma companies — Roche Holding AG and Novartis AG — are shifting production to the US, with pledges to invest $50 billion and $23 billion there, respectively.
While the pharma sector makes the Swiss economy more resilient to currency swings, the strong franc still hurts. The currency has appreciated almost 10% against the dollar since Trump’s inauguration.
Roche said on Thursday that it expects 2025 sales to grow 5 percentage points less due to the currency impact, assuming exchange rates remain at their April 23 levels.
Nestle SA Chief Financial Officer Anna Manz told analysts the same day that the franc’s recent strengthening will “see an increased impact” on future sales.
The SNB’s room to ease franc pains is limited, with its benchmark interest rate of 0.25% already one of the lowest in the world. The central bank’s intervention to weaken the franc also drew Trump’s ire doing his first term, with the US Treasury listing Switzerland as a currency manipulator.
“The SNB has two horrible options,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “Cutting again or increasing Trump’s rage by intervening during the crucial three-month negotiation period.”
Ozkardeskaya expects the SNB to initially cut rates, before assessing whether further action is needed to tame the franc. Economists at UBS Group AG recently said that the central bank will lower its benchmark rate to zero when officials next meet in June.
For the moment, manufacturers like Falu, along with Swiss watchmakers such as Rolex and Patek Philippe, may have to adjust prices and accept lower profit margins in the hope that tariffs and franc strength is a short-lived squall, according to KOF economist Gersbach.
“If the shock is not temporary, significantly greater adjustments will be necessary,” he said.
Keller-Sutter highlighted Swiss investment in the US and pointed out that Switzerland unilaterally scrapped industrial tariffs last year, but it’s uncertain whether that will satisfy the trade deficit-focused Trump administration. The Swiss president warned on Thursday that businesses can’t live with uncertainty, and while the government is aiming for zero tariffs, she sounded sanguine about the prospects for negotiations.
“I don’t think we’ll return to the old order completely,” Keller-Sutter said. “We have to come to terms with the new order somehow.”
--With assistance from Sonja Wind and Dylan Griffiths.
