Preparation for potential economic losses due to Trump's trade tariffs is advised for Switzerland
The Skinny on Switzerland's Uneasy Trade Relations Amidst Trump's Tariffs
After just three hurried weeks into his presidency, Donald Trump made good on his threats to slap hefty tariffs on imports from not one, but three key trading partners: the US' neighbours, and China. As stock markets around the globe tumbled, Swiss Markets Index (SMI) took a nosedive. As the dust settled, the questions linger: what's next for Switzerland?
While Switzerland has yet to feel the direct sting of these new tariffs, experts are raising concerns. "It wouldn't be wise to believe Trump's strategies won’t affect Switzerland," Stefan Brupbacher, head of Swissmem, the association for the Swiss machinery, electrical equipment, and metals industry, told Swiss media. The reason? Some Swiss companies have subsidiaries in China and Mexico, which will be hit with the high tariffs.
Economist Johannes von Mandach has a more alarming fear: Trump might soon escalate his trade war against the European Union, a move that's much closer to home and would shake the Swiss economy to its core. That's because Switzerland, although not a member of the EU, is tied to Brussels through more than 100 bilateral treaties, including trade agreements. Moreover, the EU, and Germany in particular, is Switzerland's biggest export market, meaning Swiss companies will likely suffer if Trump targets Europe next.
If the EU becomes a target, Switzerland "should prepare for a loss of income from its exports," von Mandach warned.
One sector that could especially feel the pinch is the pharmaceutical industry, which depends heavily on the US as a key export market. If Trump imposes tariffs on European and Swiss companies, the pharmaceutical sector could face significant losses.
Switzerland's response to this uncertain situation? Diplomatic engagement and lobbying. According to the State Secretariat for Economic Affairs (SECO), the Swiss embassy in Washington has been working tirelessly to establish relationships with members of the new Trump administration to facilitate open and constructive dialogue. The goal? To find a way to minimize disruption to Switzerland's export sector.
In the meantime, Switzerland is keeping its fingers crossed. Trump seems to harbor a soft spot for the tiny European nation, sothere's hope that it will emerge unscathed. However, only time will tell. Stay tuned for updates on how Switzerland navigates this trade storm.
Additional Reading: Will Switzerland Emerge Victorious in Trump's Trade War?
- Switzerland, given its economic ties to the European Union and its key export market, Germany, could face significant disruption to its business sector if Trump expands his tariffs to include the EU.
- According to economist Johannes von Mandach, if the EU becomes a target for Trump's tariffs, Switzerland should expect a loss of income from its exports.
- In order to minimize disruption to its export sector, Switzerland's response to the uncertain trade situation has been diplomatic engagement and lobbying, with its embassy in Washington working tirelessly to establish relationships with members of the Trump administration.
- The pharmaceutical industry, which heavily depends on the US as a key export market, could face significant losses if Trump imposes tariffs on European and Swiss companies in the trade sector.
