Switzerland Faces Struggles in Attempting to Rework U.S. Customs Duties
Switzerland's efforts to renegotiate tariffs with the United States have been met with challenges, primarily due to the country's decentralized federal structure. This system, composed of 26 cantons, each with broad authority and significant autonomy, complicates swift, unified decision-making on complex international trade issues like tariffs.
The Swiss Federal Assembly, a bicameral system, is designed for consensus and extensive negotiation. The Council of States represents cantonal interests, while the National Council represents the population at large. This balance of power and the need for consensus within Switzerland itself slows down decision-making, limits the federal government's ability to act decisively, and creates challenges in negotiating and implementing unified trade policies efficiently.
These factors are believed to have contributed to Switzerland's difficulties in finalizing a trade agreement with the US before the August 1 deadline. The continued tariff impositions and delays in reaching a deal despite preliminary agreements and memorandum of understanding are a result of these structural issues.
Switzerland's tradition of neutrality also limits its geopolitical leverage in negotiations. Unlike the European Union, which made a $750 billion US energy investment pledge, Switzerland's approach is more conservative. Proportionally, Swiss consumers spend more per capita on US products than Americans spend on Swiss imports, but US tariffs make Swiss imports less attractive to the US market.
The US justifies these high tariffs due to a $40-billion trade deficit with Switzerland. However, Swiss negotiation expert Frédéric Mathier notes that Trump wants a stage and needs to feel like the boss in negotiations. This unpredictability means there's no guarantee that tariff levels won't change again in the future.
Despite these challenges, Switzerland remains committed to negotiating with the US to reduce these tariffs as quickly as possible. Direct democracy mechanisms in Switzerland can force referendums on key issues, including tariff deals and future bilateral treaties with the European Union. Voters will have the final say, making the process more complex but also ensuring transparency and accountability.
The UK's Financial Times claims that Switzerland's inability to renegotiate the tariffs is due to a 'structural vulnerability' of its political system. The Swiss president cannot unilaterally offer large sums of money without risking a domestic political backlash or a vote. This structural vulnerability, coupled with the need for consensus and the country's tradition of neutrality, makes Switzerland's position in international trade negotiations unique and challenging.
Business and finance sectors are closely watching Switzerland's ongoing negotiations with the United States, as the country's political structure presents unique challenges. The General-News outlets report that the decentralized federal system, consisting of 26 cantons with considerable autonomy, slows down decision-making and limits the federal government's ability to act decisively, affecting trade policies, especially tariff agreements. In politics, the Swiss Federal Assembly's bicameral design and the need for consensus make the negotiation process complex,further contributing to the difficulties in finalizing a trade deal with the US.
