Switzerland and U.S. Tariffs: Investing in Dialogue and Diplomacy
- IPG
- 13 hours ago
- 8 min read
Muharem Rusiti
May 2025
In early April 2025, President Donald Trump caught many governments around the world off guard by announcing sweeping “reciprocal” tariffs. The move, intended to recalibrate America’s trade imbalances, targeted Switzerland’s exports to the United States particularly heavily with levies as high as 31% – the highest among all OECD countries. This decision cast a long shadow over one of the most robust bilateral economic partnerships on the globe, prompting former U.S. Ambassador to Switzerland Edward McMullen to declare: “As far as Switzerland is concerned, I’m a bit perplexed. It makes no sense for Switzerland to be subject to a 31% tariff, while the European Union is at 20%”.[1]
Yet, within days, a quiet, deft intervention from Swiss President Karin Keller-Sutter resulted in a temporary reprieve: a 90-day pause on the most punitive rates – a rare win for diplomacy amid economic turbulence.
A Complex Trade Architecture
The U.S. and Switzerland share a deeply integrated economic relationship. In 2023, Switzerland exported $56.29 billion in goods and $32.31 billion in services to the U.S., while American exports of goods and services to Switzerland amounted to a combined $85.3 billion, making the bilateral trade volume nearly $186 billion. In other words, Switzerland is the fourth most important export market for services and the fourteenth most important export market for goods for the U.S., although it has a population that is less than 1% of the United States.[2]
Far more striking is Switzerland’s investment profile in the U.S.: it is the seventh-largest source of foreign direct investment (FDI), with a stock of over $307 billion – more than the combined U.S. FDI from Germany, France, Italy, and the UK. Swiss firms directly support 500,000 jobs in all 50 states and are especially active in manufacturing. They also significantly outspend affiliates from other countries in research and development, investing more than $10 billion annually in U.S.-based R&D. Among the seven largest investing countries, Swiss companies pay the highest average annual salary – $110,000 – and rank third in total income taxes paid by foreign affiliates, contributing $6.7 billion to U.S. federal and state revenues.[3]
These figures underscore not only the volume but the value of the Swiss economic presence in the U.S. Despite Switzerland’s population of just under nine million, its economic footprint in America is substantial. Swiss exports – dominated by pharmaceuticals, precision instruments, and luxury watches – have high market shares and limited substitutability, particularly in sectors lacking significant U.S. domestic production capacity.
The bilateral relationship is also more balanced than it might appear at first glance. While Switzerland runs a goods trade surplus of around $25 billion, the United States maintains a $20 billion surplus in services. When both sectors are considered, Switzerland’s total trade surplus with the U.S. narrows to just $5 billion – a notably modest figure compared to the imbalances seen with other major partners such as China or the EU.[4]
This structural complementarity – where Swiss goods are difficult to replace and Swiss capital helps fuel U.S. growth – adds further complexity to any simplistic application of tariff logic. It also helps explain why both Swiss and American stakeholders have reacted with confusion and concern to the recent tariff announcement.[5]
The Role of Gold and Methodological Missteps
Further complicating the U.S. rationale is the transit of Swiss gold exports, which the Swiss National Bank argues distorts trade data. Switzerland primarily serves as a refining and transit hub; gold that merely passes through should not be counted as a genuine export surplus. Yet, this likely inflated the trade imbalance used to justify punitive tariffs.[6]
President Trump reportedly used a simplified formula – taking the bilateral trade deficit, dividing it by Swiss exports to the U.S., and halving the result – to determine a “reciprocal” tariff. This opaque methodology led to disproportionately high rates for Switzerland, which had already eliminated most structural barriers to U.S. trade, including tariffs on industrial goods.[7] [8]
Swiss Diplomacy in Action
Following the tariff impositions by the Trump administration, Swiss diplomacy immediately swung into action, with Swiss President Karin Keller-Sutter calling her American counterpart on the phone and reportedly reminding him of Switzerland’s tariff-free import policy on U.S. industrial goods, its commitment to open markets, and the scale of Swiss investment in American communities. She also reportedly emphasized the potential disruption the imposition of these new tariffs could cause to American jobs and consumers, particularly in industries like pharmaceuticals and luxury goods.[9] [10] [11] [12]
Shortly thereafter, Trump paused the 31% tariff for 90 days, retaining only a baseline 10% tariff for now. While some attribute the shift to market pressures, Keller-Sutter’s timely intervention – highlighted by outlets such as The Washington Post – suggests Swiss diplomacy played a decisive role.[13] [14] [15] [16]
Furthermore, the Swiss government decided to further step up contacts with the U.S. by establishing a steering body, which will involve all departments and the Federal Chancellery, and appointed a special envoy to Washington with the aim of enhancing the relations between the two nations.[17] [18]
Strategic Implications and the Path Forward
To effectively navigate the challenges posed by recent U.S. tariff policies and broader global economic upheaval, nations need to adopt strategies rooted in thoughtful dialogue and diplomacy rather than in confrontation, open challenge, or adversarial posturing. And the Swiss government appears to have fully embraced this course of action, as demonstrated by all the steps taken so far – from the Swiss President’s personal call to her U.S. counterpart, to the creation of a steering body, and the appointment of a special envoy to Washington. An approach that has been well received by the U.S. administration and has already yielded promising results. These positive impressions were also emphasized by the aforementioned American political strategist and earlier diplomat Edward McMullen, who affirmed: “What Swiss President Karin Keller-Sutter is doing is brilliant”.[19]
Thus, one of Switzerland’s most promising avenues lies in strengthening its diplomatic and strategic communication efforts in the United States. By directly engaging with the U.S. government, lawmakers, and governors – particularly in states where Swiss companies are major employers – Bern can effectively reinforce the message that Switzerland’s economic presence is a shared success story.
Building on this, Switzerland should also frame its economic relationship with the U.S. in more explicit and comprehensive terms. Much of the Trump administration’s tariff rationale rests on goods trade deficits, yet the services sector tells a different story – one in which the U.S. maintains a sizable surplus. By punctually providing clearer and more detailed data on software, financial, and consulting services flowing into Switzerland, and by further emphasizing the significance of Swiss investments in the U.S., Bern can help recalibrate Washington’s perception of the overall bilateral partnership, as highlighted by the former U.S. Ambassador to Switzerland and 2016 Trump presidential campaign advisor, Edward McMullen: “When all the information and data is gathered and looked at objectively, Switzerland will be in a very good position. Switzerland is not taking advantage of the US when you look at the big picture, such as trade or services. There may be problems with agricultural products and other small things, but that doesn’t make a big difference. What does make a big difference is the huge investment by Swiss companies and the quality of the jobs they bring to the U.S.”.[20]
Beyond this year’s unexpected tariff crisis, Switzerland needs a more enduring strategy for U.S. trade relations – one that acknowledges the cyclical nature of American trade policy. Establishing permanent monitoring mechanisms and maintaining continuous engagement with both political parties and across all branches of U.S. government would help Switzerland anticipate and adapt to policy shifts. By institutionalizing the current crisis response – through regular economic dialogues, data exchange protocols, and sustained investment in strategic communication – Switzerland can transform a temporary diplomatic success into a durable framework for managing bilateral economic relations across changing U.S. administrations.
Finally, in a moment defined by recalibration rather than rupture, Switzerland’s measured, persistent diplomacy exemplifies how small states can influence global powers – not through grandstanding and confrontation, but through principled engagement and constructive cooperation. The road ahead may be uncertain, but investing in dialogue and diplomacy remains Switzerland’s most promising path through this new era, setting an example for other nations seeking to navigate global challenges – including the U.S. tariffs issue – with wisdom and foresight.
And, even if perhaps only of symbolic importance, it is worth noting that it was recently announced that talks between the U.S. and China which ultimately resolved the tariffs issue – which marked the first official engagement between the world’s two largest economies – was ultimately held in Switzerland. As U.S. Treasury Secretary Scott Bessent confirmed on May 6, 2025: “I was going to be in Switzerland to negotiate with the Swiss. Turns out the Chinese team is traveling through Europe. And they will be in Switzerland, also. So, we will meet on Saturday and Sunday”.[21] [22] [23] [24]
[1] Swissinfo, 2025. Trump tariffs: ‘I’m a bit perplexed’, says former US ambassador to Switzerland. April 5.
[2] Federal Department of Foreign Affairs, 2024. Swiss-U.S. Economic Relations. August 23.
[3] Federal Department of Foreign Affairs, 2024. Swiss Direct Investment in the United States. August 23.
[4] PWC, 2025. A brief note on Switzerland and the United States. Navigating the trade and investment landscape in 2025. January 16.
[5] Swissinfo, 2025. Trump tariffs: ‘I’m a bit perplexed’, says former US ambassador to Switzerland. April 5.
[6] Stirling, C., 2025. Swiss Gold Transit Distorts US Trade Surplus, SNB Paper Says. Bloomberg. April 8.
[7] State Secretariat for Economic Affairs, 2024. Abolition of industrial tariffs. February 20.
[8] Reuters, 2025. Swiss minister stresses country's contribution to US to avoid Trump tariffs. March 23.
[9] Bachmann, H., 2025. Did Switzerland's president persuade Trump to back down on tariffs? The Local. April 10.
[10] Reuters, 2025. Swiss president talks trade with Trump, hopes for fixes soon. April 9.
[11] Swissinfo, 2025. Swiss president talks to Trump about tariffs. April 10.
[12] Bluewin, 2025. Was Keller-Sutter's call decisive for Trump's tariff pause? April 10.
[13] Allison, N., Birnbaum, M., Meyer, T., and Zakrzewski, C., 2025. The 18 hours that changed Trump’s mind on trade. The Washington Post. April 9.
[14] Tito, C., 2025. Keller-Sutter: “Svizzera, Rolex e tariffe: così al telefono ho convinto Trump”. La Repubblica. April 12.
[15] Bachmann, H., 2025. Did Switzerland's president persuade Trump to back down on tariffs? The Local. April 10.
[16] Swissinfo, 2025. Keller-Sutter, “orologi e investimenti, così ho convinto Trump”. April 12.
[17] Federal Department of Foreign Affairs, 2025. Swiss–US relations: Federal Council establishes steering body. April 9.
https://www.eda.admin.ch/eda/en/fdfa/fdfa/aktuell/news.html/content/eda/en/meta/news/2025/4/9/105611
[18] Swissinfo, 2025. Swiss president talks to Trump about tariffs. April 10.
[19] Swissinfo, 2025. Trump tariffs: ‘I’m a bit perplexed’, says former US ambassador to Switzerland. April 5.
[20] Swissinfo, 2025. Trump tariffs: ‘I’m a bit perplexed’, says former US ambassador to Switzerland. April 5.
[21] Ambrose, T., Campbell, L., Chao-Fong, L. and Mackey, R., 2025. US and China to hold tariff talks in Switzerland this weekend, treasury chief says – as it happened. The Guardian. May 7.
[22] Goldman, D., 2025. Trump’s team is finally meeting with China. The future of the global economy is riding on its success. CNN. May 6.
[23] Hussein, F., Miller, Z. and Tang, D., 2025. China and U.S. to Hold First Major Trade Talks During Ongoing Trump Tariff War. Time Magazine. May 7.
[24] Chen, L., Lawder D. and Shalal, A., 2025. US, China to hold ice-breaker trade talks in Geneva on Saturday. May 7.