The Trump administration's 39% tariff on Swiss exports has put a country that typically stays out of global conflicts directly in the crosshairs of a global trade war.
The "worst-case scenario has become a reality", Swissmem, a group representing the Swiss engineering and tech industries, told The New York Times. If this "exorbitant customs burden is maintained", Switzerland's "export business to the USA will be effectively annihilated".
Why Switzerland? Switzerland has "long prized what it describes as an 'excellent' relationship with America", said The New York Times. But while Switzerland has remained mostly neutral in recent American affairs, Donald Trump has railed against the country, grouping it among the nations that he says "treat Americans 'unfairly' by exporting more goods to the United States than they buy from it".
Is that true? Switzerland does have a high trade deficit with the US — about $48 billion (£35.4 million), according to the US Census Bureau. That accounts for around half of Switzerland's overall trade surplus, but balancing it out seems "impossible", said the BBC. Switzerland's specialties, such as pharmaceuticals, gold, luxury goods and high-end machinery, fit American demand. Conversely ,"the population of Switzerland is just nine million, and, bluntly, many of them don't want to buy US products".
What does it mean for Switzerland? The decision to hit Switzerland with the highest US tariff on any developed nation came as a "surprise to the European country", given that a "trade agreement had seemingly been imminent", said CNBC. There are tariff exemptions for Swiss gold and pharmaceutical businesses, two areas in which the US relies heavily on Swiss imports, but Switzerland's other industries have become "victims of Trump's economically misguided focus on bilateral trade balances", said The Economist.
Switzerland may be able to make up some of the lost trade by increasing its market in the EU, said the BBC, but "politically, being slighted by America hurts". |