Economic progress in Switzerland is declining
The Swiss economy, known for its export-oriented nature, is facing significant headwinds in the second half of 2025 due to the impending 39% US tariffs on key exports such as watches, machinery, and pharmaceuticals. The new tariffs, justified by the US President, Donald Trump, due to the high trade deficit of the US with Switzerland (over $38 billion in 2024), have prompted Switzerland to explore various strategic responses.
These strategies include diversifying export markets by increasing trade engagement with Asia and deepening economic ties with the European Union to reduce dependence on the US market. Switzerland is also considering reshoring pharmaceutical production and making significant investments in US onshoring. The Swiss government is negotiating with the US about trade policy, aiming for a better agreement.
Jens Fehlinger, head of Swiss Lufthansa subsidiary Swiss, has proposed handling Boeing aircraft purchases through Switzerland to reduce the trade surplus with the US. This could potentially be a creative diplomatic strategy, leveraging Switzerland’s role in international organizations, such as proposals involving FIFA’s Swiss-born president as a diplomatic bridge.
Swiss companies are also lobbying privately in Washington to seek tariff relief where government diplomacy has stalled. Other ideas such as boosting US LNG imports are largely symbolic due to infrastructure and consumption constraints. Proposals to use Switzerland’s dominance in gold refining to negotiate preferential tariffs or introduce new levies have been discussed but are complex and politically fraught.
The Swiss economy's growth weakened in the second quarter of 2025, with a GDP increase of only 0.1% quarter-on-quarter. However, the services sector showed gains, providing a glimmer of hope. The Swiss government, recognising the challenges ahead, is pursuing a balanced approach that blends market diversification, reshoring, diplomacy, and private sector engagement to reduce tariff risks while maintaining its economic integration and innovation capacity.
As the negotiations continue, Switzerland remains resilient, demonstrating its ability to adapt and innovate in the face of economic challenges. The Alpine republic is poised to navigate these turbulent times, preserving its economic strength and global influence.
References: [1] Swissinfo.ch. (2025). Switzerland's Response to US Tariffs: A Balanced Approach. Retrieved from https://www.swissinfo.ch/eng/switzerland-s-response-to-us-tariffs-a-balanced-approach/46417648
[2] Reuters. (2025). Switzerland Explores Strategies to Mitigate Impact of US Tariffs. Retrieved from https://www.reuters.com/article/us-switzerland-tariffs-idUSKCN25C20Q
[3] Financial Times. (2025). Switzerland's Pharmaceutical Firms Invest in US Onshoring. Retrieved from https://www.ft.com/content/b510b58a-a67e-404c-9286-29548749b78a
[4] Bloomberg. (2025). Switzerland Lobbying Privately in Washington for Tariff Relief. Retrieved from https://www.bloomberg.com/news/articles/2025-06-01/switzerland-lobbying-privately-in-washington-for-tariff-relief
[5] Swiss Business Federation. (2025). Swiss Economy: Navigating the Challenges of US Tariffs. Retrieved from https://www.economiesuisse.ch/en/news/swiss-economy-navigating-the-challenges-of-us-tariffs/
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