Swiss President Karin Keller-Sutter (yes, president Karin) and her economy minister Guy Parmelin scrambled to fly to Washington on Tuesday in a last-minute bid for a deal to lower the 39% tariff imposed last week by Donald Trump.
The trip is to “facilitate meetings with the US authorities at short notice and hold talks,” the government said in a statement. Keller-Sutter’s office declined to say whether she expects to meet the American president and what trade concessions she might bring before Thursday’s deadline to implement the levy.
The scramble follows a day after the Swiss government said it is determined to win over the US on trade after last week’s shock announcement of 39% tariffs on exports to America.
“Switzerland enters this new phase ready to present a more attractive offer, taking US concerns into account and seeking to ease the current tariff situation,” it said in a statement on Monday, highlighting its foreign direct investments and research and development push in the US. It also excluded countermeasures for the time being.
With the new levies - the highest among industrial nations - scheduled to go into effect on Thursday, President and Finance Minister Karin Keller-Sutter convened an emergency meeting of the governing Federal Council to discuss how to proceed. Negotiators with the Swiss State Secretariat for Economic Affairs have already reached out to their US counterparts to try and find a way forward. Bern is focusing on getting at least a longer timeline than Thursday, according to an official close to the talks, adding that anything improving the current situation would be a win.
Trump’s tariff decision last week stunned the Swiss after talks ahead of the Aug. 1 deadline were said to look "promising." A Thursday night call instead focused on Switzerland’s trade surplus in goods with the US. The Swiss government stressed on Monday that the overhang “is not the result of any ‘unfair trade practices’.”
Switzerland’s outsized gold exports are partly to blame for the distorted trade balance. The country is the world’s biggest refining hub for the precious metal, with billions of dollars worth of gold constantly flowing into and out of the nation. Pharmaceuticals, coffee and watches are the other main drivers.
According to Bloomberg Economics, if the 39% tariff rate came into effect across the board - especially on pharmaceuticals - that would put up to 1% of Switzerland’s economic output at risk over the medium term.
The paradox faced by Keller-Sutter and her Economy Minister, Guy Parmelin, is that any concessions may be politically costly without meaningfully curbing the trade deficit with the US that Trump has criticized.
“Switzerland has to get creative,” said Stefan Legge, a trade policy researcher at St Gallen University. He did not point out why it has to get creative, because if one listened to all the "expert" economists, the US had no leverage at all in tariff negotiations. Perhaps that wasn't quite the case...
In any case, Keller-Sutter’s shuttle diplomacy follows an emergency government meeting on Monday where ministers agreed to present a new offer to the US. Gold, agriculture, planes, drugs, and energy are just some areas that may feature in any talks.
Here’s an overview of some concessions the Swiss could make according to Bloomberg:
Agricultural Tariffs
Gold
Planes
Drugs, Investments and Energy
Something Else