Tiny Switzerland faces 39% tariffs

[Infinite Chaos]

The Swiss trade deficit with the US was $47.4 billion in 2024, though if service industries are included, which
Trump conveniently ignored, the deficit shrinks to $22 billion. Switzerland sells more (primarily in
pharmaceuticals, gold jewellery, watches and machine tools) to the US than it buys.
To try to compensate for that, the Swiss government reduced its own tariffs on US industrial good to zero, and multiple
Swiss companies (Nestle, Novartis) promised multibillion dollar investments in US plants. Switzerland is
already the world's 6th largest investor in the US, creating, the Swiss say, 400,000 US jobs.

But balancing the deficit looks impossible. The population of Switzerland is just 9 million, and,
bluntly, many of them don't want to buy US products. The gas guzzling cars are too big for
alpine roads, US cheese and chocolate…well, let's just say they're not really to Swiss taste.​

Confusion and anger in Switzerland - hit by highest US tariffs in Europe

Trump threatened Switzerland with 31% tariffs but they ended up even higher, leaving the country asking why.

www.bbc.co.uk

Couple of things strike immediately - yet again US Service industries seem to always be out of the equation when budget and trade deficits are being discussed. Software, cloud, technology, financial, and professional services escape the discussions yet again.
Secondly, the Swiss are not suddenly going to start buying American chocolate - they take a great deal of pride in their own brands and as for American cars...

Is the model for all these nations affected by tariffs to simply accept that they will trade less (in physical products) with the US?
And for goodness sake - start taxing Amazon / Microsoft / Facebook properly! No more loopholes or we deserve to continue getting shafted by Trump's tactics.

 

[Decypher]

That’s one of the reasons for America’s trade imbalances with European countries, we simply don’t want a lot of American products. Food in Europe is produced to a very high standard, which is why it is exported all over the world. US dairy and meat products, for example, are not welcome. Of course, there is nothing intrinsically bad about a trade imbalance anyway, except to the economic illiterates currently running America.

 

[Rumpel]

it is a cruel blow for the Swiss

 

[Loulit01]

it is a cruel blow for the Swiss

I hope Switzerland survives. Gonna be tough, I mean, they're so poor already.

 

[multivita-man]

I predict the Swiss will figure this out. Don't let their beautiful looks fool you: the Swiss are some rugged ****en people.

 

[Mycroft]

Why are the Swiss upset? I mean, it not like they are paying for the tariffs. At least, that what all the "experts" keep telling us.

 

[Decypher]

Why are the Swiss upset? I mean, it not like they are paying for the tariffs. At least, that what all the "experts" keep telling us.

Even you should be able to understand this one. Making Swiss imports 39% more expensive for the American consumer will likely result in fewer Swiss exports to the US.

 

[multivita-man]

Why are the Swiss upset? I mean, it not like they are paying for the tariffs. At least, that what all the "experts" keep telling us.

They're paying in the form of lost trade. What you're referring to (who pays) is mentioned to challenge the notion that exporting companies pay the consumption tax. It's the importing country that pays the consumption tax. Either the consumers pay the tax or importing businesses do, and if the importing businesses do then that puts pressure on their margins, which inevitably leads to reduction in head count.

Tariffs are not inherently bad. They can work, but they have to be well-conceived and implemented. Slapping tariffs are all countries is just stupid. I can't think of a single economist living or dead who makes the argument that tariffs on all countries is macroeconomically in a country's best interests.

 

[SenorXm/Sirius]

Why are the Swiss upset? I mean, it not like they are paying for the tariffs. At least, that what all the "experts" keep telling us.

Because of this post by you, you should never be allowed to reply in any threads about economics...

 

[Mycroft]

Even you should be able to understand this one. Making Swiss imports 39% more expensive for the American consumer will likely result in fewer Swiss exports to the US.

Well, that's what I've always thought, but people here...and all the experts...keep telling me that the US consumer pays for the tariffs.

You are telling me that, in reality, the US consumers won't be paying the tariffs because they won't be buying the Swiss stuff. Thanks for confirming what I've always thought.

So...now that we have that "who pays the tariff" nonsense out of the way, the question is...what should the Swiss do about the tariffs.

Seems to me they have a choice. Make a deal with Trump or don't make a deal with Trump...or, join the EU and enjoy the EU's deal with the US. Hmmm...will the EU even want the Swiss to join them? shrug... I don't know.

Oh. Wait. There was that mention in the article that Trump isn't in any hurry to talk to the Swiss. That's unfortunate. Maybe the Swiss waited too long before trying to make a deal? What's that saying? You snooze, you lose?

 

[Decypher]

Well, that's what I've always thought, but people here...and all the experts...keep telling me that the US consumer pays for the tariffs.

You are telling me that, in reality, the US consumers won't be paying the tariffs because they won't be buying the Swiss stuff. Thanks for confirming what I've always thought.

So...now that we have that "who pays the tariff" nonsense out of the way, the question is...what should the Swiss do about the tariffs.

Seems to me they have a choice. Make a deal with Trump or don't make a deal with Trump...or, join the EU and enjoy the EU's deal with the US. Hmmm...will the EU even want the Swiss to join them? shrug... I don't know.

Oh. Wait. There was that mention in the article that Trump isn't in any hurry to talk to the Swiss. That's unfortunate. Maybe the Swiss waited too long before trying to make a deal? What's that saying? You snooze, you lose?

Wait, did you think US consumers would be forced to pay tariffs? Obviously they would have the choice to not buy more expensive goods and simply do without.

In your reading, you apparently missed the bit where the Swiss don’t want American products, and now Americans can’t afford Swiss products. Everyone loses in this scenario.

 

[joluoto]

I don't think Trump even is aware Switzerland exists.

 

[Mycroft]

Wait, did you think US consumers would be forced to pay tariffs? Obviously they would have the choice to not buy more expensive goods and simply do without.

I've never thought that US consumers would be forced to pay for the tariffs, but that's what the experts keep telling me. You know, tariffs are a tax and all that.

In your reading, you apparently missed the bit where the Swiss don’t want American products,

Maybe they should try changing their minds.

and now Americans can’t afford Swiss products. Everyone loses in this scenario.

Not really.

There are other solutions, such as the Swiss reducing their prices, the Swiss building their products in the US, Americans finding others who will make similar products, or Americans making the products themselves.

shrug...

We'll just have to see how this all shakes out.

 

[Decypher]

I've never thought that US consumers would be forced to pay for the tariffs, but that's what the experts keep telling me. You know, tariffs are a tax and all that.


Maybe they should try changing their minds.


Not really.

There are other solutions, such as the Swiss reducing their prices, the Swiss building their products in the US, Americans finding others who will make similar products, or Americans making the products themselves.

shrug...

We'll just have to see how this all shakes out.

Tariffs are a consumption tax, essentially a sales tax on exports. It’s seems you’ve simply misunderstood the objection to tariffs all this time.

Your alternatives are unlikely. Swiss products tend to be highly specialised and high quality. They’re not getting any cheaper and Americans can’t make them.

 

[Juin]

The Swiss trade deficit with the US was $47.4 billion in 2024, though if service industries are included, which
Trump conveniently ignored, the deficit shrinks to $22 billion. Switzerland sells more (primarily in
pharmaceuticals, gold jewellery, watches and machine tools) to the US than it buys.
To try to compensate for that, the Swiss government reduced its own tariffs on US industrial good to zero, and multiple
Swiss companies (Nestle, Novartis) promised multibillion dollar investments in US plants. Switzerland is
already the world's 6th largest investor in the US, creating, the Swiss say, 400,000 US jobs.

But balancing the deficit looks impossible. The population of Switzerland is just 9 million, and,
bluntly, many of them don't want to buy US products. The gas guzzling cars are too big for
alpine roads, US cheese and chocolate…well, let's just say they're not really to Swiss taste.​

Confusion and anger in Switzerland - hit by highest US tariffs in Europe

Trump threatened Switzerland with 31% tariffs but they ended up even higher, leaving the country asking why.

www.bbc.co.uk

Couple of things strike immediately - yet again US Service industries seem to always be out of the equation when budget and trade deficits are being discussed. Software, cloud, technology, financial, and professional services escape the discussions yet again.
Secondly, the Swiss are not suddenly going to start buying American chocolate - they take a great deal of pride in their own brands and as for American cars...

Is the model for all these nations affected by tariffs to simply accept that they will trade less (in physical products) with the US?
And for goodness sake - start taxing Amazon / Microsoft / Facebook properly! No more loopholes or we deserve to continue getting shafted by Trump's tactics.

I just don't care for protectionism. I will rather Switzerland is not hit with gratuitous tariffs. I can see a justification for retaliatory tariffs, the aim being leveling the playing field. It's not looking like tariffing is being carried out with the goal of leveling the playing field and promoting free trade. You get the feeling that it is used as a strategic geopolitical tool aimed at imposing a new form of vassalage

 

[Juin]

That’s one of the reasons for America’s trade imbalances with European countries, we simply don’t want a lot of American products. Food in Europe is produced to a very high standard, which is why it is exported all over the world. US dairy and meat products, for example, are not welcome. Of course, there is nothing intrinsically bad about a trade imbalance anyway, except to the economic illiterates currently running America.

Shouldn't the European consumers decide for themselves?

 

[JMR]

Even you should be able to understand this one. Making Swiss imports 39% more expensive for the American consumer will likely result in fewer Swiss exports to the US.

The "upside" to this is that with fewer Swiss watches imported sales for Trump watches are sure to increase.

 

[Helix]

Using tariffs in this way is abject stupidity.

 

[Juin]

Why are the Swiss upset? I mean, it not like they are paying for the tariffs. At least, that what all the "experts" keep telling us.

They are not! The US consumer pays

 

[bythoughts]

Swiss chocolate was already too elite for the U.S., in large part. For Americans it's a huge step up to buy chocolate from Turkey, Ukraine, Poland, Belgium ... well, just about anywhere really. They all do it better.

 

[Juin]

Even you should be able to understand this one. Making Swiss imports 39% more expensive for the American consumer will likely result in fewer Swiss exports to the US.

The problem is with the folks who make the argument tariffs is a tax on the consumer. Apparently that is grossly misleading. It is a tax only on a consumer who choses to be taxed

 

[trixare4kids]

Wait, did you think US consumers would be forced to pay tariffs? Obviously they would have the choice to not buy more expensive goods and simply do without.

In your reading, you apparently missed the bit where the Swiss don’t want American products, and now Americans can’t afford Swiss products. Everyone loses in this scenario.

If they don't want to buy American products (for whatever their reason), I don't feel badly for them.
There will always be some Americans who can afford their products, and the tariffs collected on those products will in turn be used to reduce federal deficits or fund government spending.

 

[Visbek]

Tariffs are a consumption tax, essentially a sales tax on exports. It’s seems you’ve simply misunderstood the objection to tariffs all this time.

He knows the truth.

He's just going to say anything that he thinks will support Dear Leader.

 

[Juin]

Well, that's what I've always thought, but people here...and all the experts...keep telling me that the US consumer pays for the tariffs.

You are telling me that, in reality, the US consumers won't be paying the tariffs because they won't be buying the Swiss stuff. Thanks for confirming what I've always thought.

So...now that we have that "who pays the tariff" nonsense out of the way, the question is...what should the Swiss do about the tariffs.

Seems to me they have a choice. Make a deal with Trump or don't make a deal with Trump...or, join the EU and enjoy the EU's deal with the US. Hmmm...will the EU even want the Swiss to join them? shrug... I don't know.

Oh. Wait. There was that mention in the article that Trump isn't in any hurry to talk to the Swiss. That's unfortunate. Maybe the Swiss waited too long before trying to make a deal? What's that saying? You snooze, you lose?

The 'its a tax on the consumer' is clearly misleading. The word tax suggests a penalty a consumer cannot avoid. In this case it is a tax only on the consumer who choses to be taxed.

 

[Juin]

If they don't want to buy American products (for whatever their reason), I don't feel badly for them.
There will always be some Americans who can afford their products, and the tariffs collected on those products will in turn be used to reduce federal deficits or fund government spending.

I am always suspicious of the argument that European consumers don't want American products because they prefer higher quality European ones. You look deeper you find that a whole bunch of tariffs and regulations have stripped the European consumer of a choice in the matter.