Swiss business leaders don’t understand what happened. I do.
Fractured Relationship
The Wall Street Journal reports Trump’s ‘Slap in the Face’ Puts Neutral Switzerland in Trade-War Crossfire
When Nicola Tettamanti looked at his phone Friday morning, his first reaction was disbelief: Overnight, President Trump had slapped Switzerland with close to the highest tariffs of any country in the world.
Tettamanti is the chief executive of a 55-year-old precision toolmaking business nestled in this mountain-hugged town. He had planned in the near future to expand further into the U.S. by opening an office in Indiana.
His company, Tecnopinz, counts on the American market for as much as a fifth of the demand for its components for industrial machines that make cars, planes and watches.
“I had to check my phone twice, I thought it was fake news,” said Tettamanti on the company’s factory floor, about two scenic hours by train south of Zurich. “This is a catastrophic scenario.”
In a land famed for its neutrality and order, the Swiss reacted with shock and confusion to Trump’s decision to impose a 39% tariff—higher than all but three nations on last week’s executive order: Laos, Myanmar and Syria. Switzerland is one of the few nations whose Aug. 1 tariff rate was higher than Trump’s “Liberation Day” threats in April.
The move upended months of negotiations in which Swiss officials believed they were on the verge of securing a favorable deal.
Business leaders and politicians are scrambling to understand why their historically stable relationship with Washington has suddenly fractured. The Swiss newspaper Blick called it the country’s biggest defeat since French victory in the Battle of Marignano in 1515.
“Switzerland is not a threat to U.S. national security,” said Jan Atteslander, member of the executive board at Swiss business organization Economiesuisse. “Our chocolate and watches don’t endanger U.S. manufacturing.”
Many here now wonder whether Switzerland’s go-it-alone stance in the world should be jettisoned for a closer relationship with the European Union, which struck a more advantageous 15% rate with Trump.
The deficit in goods has skyrocketed this year due to a surge in pharmaceutical and gold imports looking to get to the U.S. ahead of anticipated tariffs. The deficit was nearly $50 billion this year through May, ranking as the fifth-largest goods-trade imbalance among U.S. trading partners.
In June, the U.S. Treasury Department added Switzerland to its watchlist for unfair economic and currency practices. During Trump’s first term, it labeled Switzerland a currency manipulator, accusing it of weakening the franc to aid exports. The central bank has said it intervenes in currency markets to stabilize inflation, not for trade advantage.
For months, Keller-Sutter and her officials had been negotiating a deal that would see Switzerland invest around $150 billion into the U.S. and keep its exports at a lower tariff rate than for the EU.
The two sides met in Washington in April, after which Keller-Sutter said that Switzerland was one of 15 countries the U.S. was working with on negotiations to reach fast deals.
Switzerland gained further credibility when it hosted trade talks between the U.S. and China in May that led to a dialing-down of hostilities. In recent weeks, Swiss government officials suggested a deal was in its final stages.
Some companies took immediate action. The Lucerne-based confectionery maker Confiserie Bachmann—known for its Schutzengeli, or handcrafted guardian-angel chocolate truffles—closed its online shop to U.S. customers to avoid the new levy.
What I don’t understand is why any country or business would expect anything from Trump other than to be spit on.
The numbers are what they are.
It’s obvious that counting gold front-running is absurd. But it is absurd to expect anything from Trump than economic idiocy.
The Correct Attitude
“We’re a small country, we can’t pressure the U.S.,” said Karl Gschwend, a pensioner living in Zurich who used to work as an electrical engineer and had U.S. customers. “Now I wouldn’t want to work with Americans if I had to. Well, maybe in three and a half years when Trump is gone.”
Let Trump have his damn tariffs. Ignore them and watch US jobs crumble led by massive small business failures in the US.
Switzerland Data
- 2024 Exports: 25,042,798,073
- 2024 Exports Through May: 23,917,705,483
- 2024 Imports: 63,325,522,091
- 2025 Imports Through May: 71,803,668,668
- 2024 full year deficit: 38,282,724,018
- 2025 deficit through May: 47,885,963,185
Reciprocal Tariff Nonsensical Calculation
Tariff percent = ((Imports – Exports) / Imports) * 50)
2024 percent = ((63,325,522,091 – 25,042,798,073) / 63,325,522,091) * 50) = 60 percent
2025 percent = ((71,803,668,668 – 23,917,705,483) / 71,803,668,668) = 67 percent.
I suppose Switzerland should be grateful that Trump’s “deal” is not 60 percent or higher.
But the calculation shows why the U.S. Treasury Department added Switzerland to its watchlist for unfair economic and currency practices in June.
Am I the only one who understands this stupid formula?
Regardless, Trump does not give a damn why a nation has a surplus. He generally demands a 15 percent minimum tariff except in rare cases where the US has a trade surplus and then it’s a minimum of 10 percent.
In 2022, the US had a services surplus with Switzerland of 21.5 billion. If we factor that in (but Trump doesn’t) here’s an alternate reciprocal tariff calculation for 2024.
2024 percent = ((41,825,522,091 – 25,042,798,073) / 41,825,522,091) * 50 = 20 percent.
Usually I can figure out where Trump gets a number, but 39 percent does not match anything.
Reflect on the Lead Chart
Strip out gold and pharma. The former is a monetary metal that the BEA ignores (so should Trump) and pharma is a direct result of flawed US tax policy.
Next factor in the US services trade surplus, and the whole thing nets out to about zero. Yet, team trump is investigating Switzerland for manipulation.
There is no dealing with economic madmen. All one can do is step back and wait for this to blow up in Trump’s face and that process is underway with jobs.
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