Trump’s 39% Tariff on Swiss Goods: Rolex, Chocolate & Pharma Face Crisis

Switzerland under pressure: Trump’s 39% import tariff threatens to undermine export fundamentals

On August 1, 2025, precisely on Switzerland’s National Day, the US administration under President Donald Trump unexpectedly announced that a 39% import tariff would apply to virtually all Swiss goods effective August 7. The tariff is significantly higher than the previously announced 31% and is among the highest import duties under Trump’s ambitious “Global Trade Reset” strategy .

By our economics editors – Moscow August 4, 2025

The shockwave in Switzerland was immense: political leaders expressed “deep regret”, and business leaders immediately pointed to the potentially disruptive impact on the economy. In this article, we analyze the sectoral consequences, market reactions, legal options, and long-term scenarios.

Sectoral impact: from watches to mechanical engineering

1 Watchmaking and luxury industry

The watch industry is one of the most iconic pillars of Swiss exports. In 2024, the sector exported approximately CHF 4 billion worth of watches to the United States, representing 16 to 17% of total exports.

Brands like Rolex, Patek Philippe, Cartier, Omega, and Swatch are now being hit hard. A 39% increase in the final price is expected to lead to a sharp drop in sales and a loss of market share. Analysts predict that this could increase demand for pre-owned and vintage watches by 10 to 35% in the coming months, as consumers seek out more affordable alternatives.

2 Chocolate, cheese and foods

The Swiss food industry is a global quality label, with companies such as Lindt & Sprüngli, Nestlé (premium lines), Emmi and various cheese consortia.

Smaller chocolatiers and artisanal cheesemakers, in particular, fear that the combination of high import duties and an expensive Swiss franc will undermine their competitiveness in the US. European competitors from countries like Belgium, France, and Italy, on the other hand, are benefiting from their existing trade agreements with the US and may see new market opportunities.

3 Pharmaceuticals and Chemistry

The pharmaceutical sector, with heavyweights like Novartis and Roche, is currently exempt from the 39% tariff. However, the White House points to ongoing “national security reviews” under the Trade Expansion Act (Section 232), which could theoretically lead to tariffs of up to 200%.

Multinationals are already taking measures. They are strategically stockpiling in US warehouses, diversifying through production facilities in the EU and Singapore, and redesigning their supply chains to spread risks.

4 Industry, technology and mechanical engineering

The Swiss machinery and high-tech sector, represented by companies like ABB, Georg Fischer, Bühler, and Sulzer, is particularly vulnerable. Lobby group Swissmem called it a “massive shock,” with warnings of export losses, profit declines, and possible layoffs.

These companies provide capital-intensive and often customized solutions, meaning that price increases are immediately noticeable to American customers.

Economic and market reactions

Following the announcement, the Swiss franc lost between 0.2 and 0.4% against the dollar. This was relatively limited, partly because the franc is traditionally seen as a safe haven. Nevertheless, the currency remains roughly 8% stronger than before the first round of US tariffs in April 2025. A structural weakening is only expected if export losses persist.

International stock markets, on the other hand, reacted strongly.

• The STOXX 600 lost 1.8%
• US indices saw a similar decline
• In Zurich, watchmakers, chocolate giants and machine builders were particularly under pressure, while pharmaceutical stocks saw only mild corrections due to their exemption

Trump explicitly linked the tariff to the US trade deficit with Switzerland of $38 to $40 billion in 2024. The symbolic rounding of the tariff to 39% appears to be a deliberate political message. However, economists note that this trade deficit has little impact on US employment and that the measure is more protectionist than structurally sound.

Political and legal dimensions

On August 1, Federal Council President Karin Keller-Sutter expressed “great regret” over the US decision and emphasized that Switzerland is open to negotiations. Bern was surprised by Trump’s unilateral approach, as the July talks had appeared constructive and a tariff of around 10% was expected.

The Swiss government is exploring legal action at the World Trade Organization (WTO). The tariff appears to violate the principles of non-discrimination and the proportionality of injury criteria. However, formal proceedings will take 18 to 24 months, making a swift resolution through this channel unlikely. Therefore, Bern is opting for quiet diplomacy for the time being, aiming for a tariff reduction or sectoral exemptions, and avoiding a public escalation that would trigger further Trumpian reactions. At the same time, coordination with the EU is underway to develop potential export diversion routes.

Outlook and scenarios

In the medium term, if the 39% tariff remains in place, Swiss companies will have to find creative alternatives. Exporting through EU ‑countries, increasing production in foreign subsidiaries, and utilizing alternative channels such as gray import flows and pre-owned markets are becoming viable strategies. Small and medium-sized enterprises, in particular, risk suffering significant losses.

In the long term, a persistently high tariff could lead to a permanent loss of market share in the US, a structural reshaping of supply chains towards Asia, and new waves of investment outside Switzerland to maintain competitiveness. The US remains crucial for multinationals, but confidence in sustainable free trade with Washington is eroding. Within Switzerland, a debate is growing about the limits of open markets when a partner state pursues unpredictable trade policies. Political parties are increasingly advocating for export diversification and stronger regional cooperation.

A Lesson for Europe and Russia:
The Swiss experience is not unique. Following the US announcement of a 39% import tariff on Swiss goods, the EU ‑and EFTA countries are also looking to Washington with growing concern. President Donald Trump is accelerating his so-called “global trade reset,” with widespread consequences for European exports.

1. Cars, luxury goods, and wine in the firing line – For the European Union, cars and parts are hardest hit, particularly from Germany, France, Italy, and Spain. A 15% tariff is driving up final prices and threatening market share in the US. Wine, spirits, and luxury goods such as leather goods and watches from France, Italy, and Portugal are also under significant pressure.
2. Industry and high- ‑tech under pressure – The pharmaceutical sector, particularly in Belgium, the Netherlands, and Germany, currently enjoys partial exemption. However, analysts warn that a later revision could impose tariffs of up to 30% on “national security” grounds. Semiconductors and high- ‑tech machinery from the Netherlands and Germany are also on Washington’s radar, prompting companies to consider moving production closer to the US market.
3. EFTA ‑countries vulnerable – Outside the EU, Norway (oil, gas, fish), Iceland (aluminium, fish) and Liechtenstein (precision technology) face significant risks.

European diplomats are seeking sectoral exemptions and temporary agreements, but fear that Trump will use bilateral pressure to force further concessions. If this trend continues, supply chains risk being restructured, and Europe could structurally lose market share in the US.

For Russia, the Swiss case serves as a warning sign: even financially stable and highly developed economies prove vulnerable to unilateral trade pressure and secondary sanctions. It demonstrates the fragility of open markets in an era of geopolitically driven trade.

 

ⓒ Antonio Georgopalis