Swiss Businesses Seek New Export Markets Amid High Tariffs
The recent tariffs imposed by the United States have sent shockwaves around the globe. Governments are scrambling to negotiate deals to lessen the impact. Some have succeeded, like the UK and the European Union, who have managed to secure deals with tariff rates of 10% and 15% respectively. However, Switzerland has been served a hefty 39% tariff and is still struggling to find a solution.
The Impact on Switzerland's Economy
Switzerland, though not a member of the EU, is frequently deemed the world's most competitive and innovative economy. It's a major investor in the US, contributing to the creation of around 400,000 jobs. Hence, the drastic tariff increase seems not just outrageous, but also perplexing to Swiss business leaders.
Switzerland exports about 17% of its goods to the US, a market it can't afford to lose quickly. The tariffs have already started to impact the robust Swiss economy negatively, with a decrease in economic growth and potential job losses becoming a reality.
The Effect on Swiss Exports
Pharmaceuticals, one of Switzerland's most profitable exports to the US, are not currently affected by the 39% tariffs. However, they might be subject to a forthcoming 100% tariff on imported medicines, which could be a huge setback. Another major Swiss export to the US is from the medical technology industry, which is globally recognized for its precision and quality.
The town of Biel, known for its watchmaking legacy, is now home to several medical technology companies. One such company specializes in manufacturing medical instruments like aortic valve replacements and tiny surgical drills. The production process is so precise that even the machines used to manufacture the devices are made and specially calibrated locally.
The Challenge of Moving Production to the US
While the idea of moving production to the US has been suggested, it would be a huge task, if not impossible. The separation of components from the actual product assembly would be extremely challenging, and such specialized skills may be hard to find in the US.
With these tariffs in effect, medical devices will likely become more expensive for US patients, and potentially for US taxpayers as well. Patients may be further affected if Swiss companies decide to stop exporting to the US due to the high tariffs.
Switzerland's Strategy for Coping with Tariffs
Despite the challenges, Switzerland is not retaliating against the US tariffs. Instead, it's seeking opportunities in other markets. It has recently made a trade agreement with India, touted as the fastest-growing economy in the world with a potential consumer base of 1.4 billion.
In addition to this, Switzerland has concluded a trade deal with the South American trade bloc Mercosur, is upgrading its longstanding trade deal with China, and maintains free trade with the EU, which receives 50% of all Swiss exports.
Long-Term Consequences
The US tariffs are causing damage to the Swiss economy. However, there is a quiet confidence that Switzerland will weather this storm. The more significant impact could be on the business relations between the two countries. Swiss businesses have always enjoyed doing business with the US, and this situation has caused a rift in that relationship.
Despite the current difficulties, there's hope that solutions will be found and that reason will eventually prevail. As a successful export nation, resilience is deeply embedded in Switzerland's DNA.