Preparation for potential economic setbacks due to Trump's trade tariffs recommended for Switzerland
The Trump Tariff Troubles and Switzerland's Response
barely a month into Donald Trump's presidency, he made moves to slap steep tariffs on imports from the US' adjacent nations and China. The Swiss Market Index (SMI) took a nosedive as a result, leaving the Swiss economy quivering. But what's next for the once-stable Alpine nation?
Expert voices caution that Switzerland, although not currently subject to these measures, can't expect to dodge the fallout of new trade barriers.
Stefan Brupbacher, director of Swissmem, the association of the Swiss machinery, electrical equipment, and metals industry, candidly shared his concerns with Swiss media. Companies within his association have subsidiaries in China and Mexico, thereby placing them directly in the line of fire of Trump's tariffs.
Economist Johannes von Mandach fears that Trump's protectionist policies won't stop at Mexico and China. He forebodes that Europe could be the next battleground, a development that would hit the Swiss economy harder due to its extensive ties to Brussels through more than 100 bilateral treaties, including those related to trade. Moreover, the EU, particularly Germany, is Switzerland's biggest export market, leaving Swiss companies vulnerable to the potential trade war between Europe and the U.S.
von Mandach urges Switzerland to brace itself for a dip in its export income.
In the pharmaceutical sector, which counts the US as a key market, a potential tariff hike could deal a significant blow.
To counter potential damages, Switzerland is actively behind-the-scenes lobbying through its embassy in Washington. With a vast network of contacts stretching into the new Trump administration, the Swiss embassy is working diligently to establish constructive dialogue with its future counterparts[1].
Officially, the Swiss government maintains a diplomatic facade, with President Karin Keller-Sutter expressing disappointment over the U.S.'s inclination towards trade protectionism but refraining from confrontational measures. Observers, like former U.S. Ambassador to Switzerland, Edward McMullen, view this approach as shrewd[2].
Switzerland's strategic decisions on where to direct resources or diplomatic efforts could focus on sectors like machinery, watches, and certain agricultural goods, as they are most impacted by the tariffs. However, the pharmaceutical industry, which currently avoids direct tariff targeting, may receive priority attention[2].
Ultimately, Switzerland aims to minimize economic harm and maintain strategic economic and political relationships with the United States.
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References:[1] Swissmedia.ch: " Trump's Tariffs and their Impact on the Swiss Economy"[2] Swiss Government: " Strategy for Mitigating Potential Tariff Damage"[3] Economist Johannes von Mandach: "An Interview on the Impact of Trump's Trade Policies"[4] SECO.admin.ch: "Switzerland's Diplomatic Approach under Trump's Administration"
- Switzerland, with its extensive ties to Europe and the US, cannot expect to entirely avoid the effects of the new trade barriers resulting from the tariffs implemented by Donald Trump's administration.
- Economist Johannes von Mandach warns that Europe, including Switzerland's extensive ties to Brussels and its biggest export market, Germany, could be the next battleground in Trump's protectionist policies.
- To counter potential damages, Switzerland is actively lobbying through its embassy in Washington to establish constructive dialogue with the new Trump administration, focusing on sectors like machinery, watches, and certain agricultural goods that are most impacted by the tariffs.
- The pharmaceutical industry, which currently avoids direct tariff targeting, may receive priority attention in Switzerland's efforts to minimize economic harm and maintain strategic economic and political relationships with the United States.
