Overview

• Swiss President Karin Keller-Sutter and Economy Minister Guy Parmelin arrived in Washington on August 5 to press for a reduction or delay of the 39% U.S. tariff set to take effect on August 7.
• President Trump tied the tariff to a $38.9 billion trade deficit driven by Swiss exports of gold, luxury items and pharmaceuticals.
• Industry analysts warn the levy could push U.S. retail prices for Swiss watches into the mid-to-high teens percentage range and further weigh on exports that fell 18% year-on-year in June.
• Although pharmaceuticals are exempt, Trump’s administration sent letters to the CEOs of 17 Swiss drugmakers, including Novartis and Roche, demanding price cuts under threat of retaliatory measures.
• With virtually no room to lower duties after already reducing tariffs on U.S. industrial goods to zero, Swiss negotiators may offer increased U.S. investments or energy purchases and consider defensive steps such as canceling F-35 fighter jet orders if talks falter.