She came out smiling. She had been told, she said, that Switzerland was likely to be second on the list after the United Kingdom to strike a trade deal with Washington. 10%, she hinted, was the tempting tariff offer, far lower than the 31% Donald Trump had unveiled for Switzerland on his ‘liberation day’ in April.
Now, those illusions are shattered. Just hours before the August first deadline, one last telephone call between Ms Keller-Sutter and President Trump yielded nothing. Hours later came the news that the tariffs would not be 31% as originally threatened, but a punitive 39%.
Why? Some Swiss politicians are already arguing that Switzerland’s negotiating tactics were not up to scratch – but some say too tough, others say too obsequious. The reality may be more straightforward: Trump was keen to make big deals, and Switzerland just isn’t that big. It’s not even clear now many discussions the Swiss trade negotiators were able to have with their US counterparts.
The sticking point, the Swiss government says now, is the trade deficit it has with the US.
Trump sees trade deficits – when a country sells more to the US than it buys – as inherently a problem for the US, although this is a view not widely shared by economists. He believes tariffs can help protect the US manufacturing sector, which for decades has lost jobs to companies overseas.
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.