Switzerland is seeking a negotiated solution after the U.S. imposed a 39% tariff on its exports, one of the highest rates under Donald Trump's trade agenda, prompting warnings over job losses and damage to key industries.

Swiss officials said the decision blindsided Bern, particularly after a framework agreement had been negotiated earlier in July. Finance Minister Karin Keller-Sutter said the final rate was “much higher than what we negotiated,” while Foreign Minister Ignazio Cassis noted that talks with Washington were ongoing.

The White House defended the tariff, saying it followed Switzerland’s refusal to make “meaningful concessions” in trade talks. A U.S. official said the country could no longer tolerate what it called a one-sided relationship.

Swiss industry groups warned that tens of thousands of jobs could be affected, particularly in high-value sectors such as watches, machinery, and precision tools.

“It’s a massive shock for the export industry and for the whole country. We are really stunned,” said Jean-Philippe Kohl, deputy director of Swissmem.

The Swiss watch industry, long a symbol of the country's export strength, is also expected to be hit hard. The U.S. is a major market for brands such as Rolex, Patek Philippe, and Swatch Group. Industry officials fear the tariff could hurt global competitiveness and curb demand for luxury timepieces.

The government and major business lobbies, including Economiesuisse, criticised the measure as arbitrary and unjustified.

“The tariffs are not based on any rational basis,” said a spokesperson for the Economy Ministry.

Swiss exporters are now at a disadvantage compared to peers in the EU, UK, and Japan, all of which secured lower tariff rates.

The pharmaceutical sector was spared from the 39% tariff, but officials remain concerned. The U.S. has launched a Section 232 national security investigation into medicine imports, and tariffs under that measure could reach as high as 200%.

“Swiss authorities understand that the tariffs should not include the pharmaceuticals sector,” the ministry said.

Science industries, which represents over 250 Swiss firms in chemicals and life sciences, warned of serious risks to medicine supply chains if tariffs are extended to the sector.

UBS Global Wealth Management expects weak growth but no recession, assuming Switzerland eventually reaches a deal closer to the EU’s 15% rate. Analysts say the dispute could dampen confidence in the short term but is unlikely to derail the economy entirely.

The United States is Switzerland’s top export destination, accounting for 16.8% of total exports. In 2024, Swiss goods exports to the U.S. totalled 65 billion francs ($80 billion), with a trade surplus of nearly 38.7 billion francs. Switzerland is also the seventh-largest foreign investor in the U.S., with over $300 billion in direct investments supporting around 500,000 American jobs.

The 39% tariff is set to take effect on 7 August.

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