Switzerland will hold an emergency cabinet meeting in Bern on Thursday afternoon after President Karin Keller-Sutter returned from Washington without a deal to halt a 39% U.S. tariff, now in effect and threatening major damage to Swiss exports.

The Federal Council announced the extraordinary session in a post on X, shortly after the delegation returned from Washington. Keller-Sutter's visit ended without any direct talks with U.S. President Donald Trump or senior U.S. trade officials. A proposed compromise, capping the tariff at 10%, was rejected, a source said.

Swiss negotiators say talks will continue, though an agreement is not expected imminently. One insider noted the U.S. administration had not ruled out a resolution.

During the trip, Keller-Sutter met Secretary of State Marco Rubio. She described the encounter as “very good”. Swiss officials called it constructive and held in a friendly atmosphere.

The tariff was implemented at midnight in Washington, replacing a temporary 10% rate first imposed in April. On Truth Social, Trump wrote, “Billions of dollars… will start flowing into USA,” referring to countries targeted by the revised duties.

Despite removing most import duties in 2024 and granting broad market access to U.S. goods, Switzerland had faced pressure over its 38.5 billion Swiss franc trade surplus with America. That surplus rose 17% in the first half of this year, with exporters including Swatch front-loading shipments to avoid new tariffs.

Manfred Elsif, director of research at the University of Bern's World Trade Institute, called the 39% levy "insanely high", saying Trump's fixation on trade deficits damages relations with allies.

Hans Gersbach, an economist at ETH Zurich’s KOF Swiss Economic Institute, estimated a GDP loss of 0.3% to 0.6% over 12 months if the tariffs remain. “We will not enter a recession, but we are moving towards stagnation,” he said.

Swissmem, an association representing the country’s tech exporters, warned of severe consequences. “If this horrendous tariff burden remains in place, it will mean the de facto death of the export business of the Swiss tech industry to the USA,” the group said.

Economiesuisse, the country’s largest business federation, urged the government to keep negotiating. “They severely burden the international competitiveness of our companies in the U.S. market, jeopardise long-standing trade relationships and seriously endanger thousands of jobs,” said Jan Atteslander, a senior official at the group.

Swiss markets were stable in early trading. Blue chip stocks rose 0.44%, and the franc gained 0.2% against the dollar. IG broker Chris Beauchamp said: “Markets are very good at pricing in tariff impacts it seems, and the lack of any drama so far on Swiss markets suggests a hope of some form of deal in the coming weeks.”

Talks between the two sides are expected to continue, but there is no clear timeline for resolving the tariff dispute.

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