Zurich — Swiss President Karin Keller-Sutter and business minister Guy Parmelin flew to Washington on Tuesday in a last-ditch effort to avoid the 39% tariffs announced by President Donald Trump on their country’s exports to the US.
The tariffs, increased from the initial 31% rate announced in April, are due to take effect on Thursday and have sent Switzerland reeling.
During their visit, Keller-Sutter and Parmelin will “facilitate meetings with the US authorities at short notice and hold talks with a view to improving the tariff situation for Switzerland”, the government said.
It did not comment on which parts of the US government they would meet or whether a meeting was scheduled with Trump.
A person familiar with the Trump administration’s thinking, said they were confident a deal could be worked out if Switzerland responded quickly with a better offer.
“There was some kind of bad interaction, but that can blow over, if the Swiss come with a meaningful offer,” the source said, referring to a phone call between Trump and Keller-Sutter on Thursday last week. “It is a large trade deficit, especially in per capita terms.”
Trump referred to the conversation with Keller-Sutter in an interview with CNBC on Tuesday, adding he was concerned about the US trade deficit with Switzerland.
“Look, I did something with Switzerland the other day,” he said referring to his phone call with Keller-Sutter. “The woman was nice, but she didn’t want to listen, and they paid essentially no tariffs,” he told the broadcaster.
“And I said, we have a $41bn deficit with you, madam ... and you want to pay 1% tariffs. I said, you’re not going to pay 1%, we lose, because I view deficit as loss.”
Emergency meeting
The Swiss government held an emergency meeting on Monday to decide its response to the tariff hike, and said it was ready to make a “more attractive offer”.It was also ready to pursue negotiations beyond the August 7 deadline.
Swiss officials gave no details of what extra incentives could be offered, but did say the government wasn’t considering any countermeasures against the US.
Parmelin has previously said that Switzerland buying more US liquefied natural gas (LNG) was under consideration, while further investment in the US could also be an option.
The aim of Keller-Sutter and Parmelin’s trip was to present “a more attractive offer to the US in a bid to lower the level of reciprocal tariffs for Swiss exports, taking US concerns into account,” the government said on Tuesday.
Some Swiss business leaders, including Nick Hayek, CEO of watchmaker Swatch Group, had called on Keller-Sutter to visit Washington to do a deal with Trump directly.
A trade barrier of 39% would be a hefty blow for the export-orientated Swiss economy by reducing access to its biggest overseas market for its watches, machinery and chocolate.
Hans Gersbach, an economist at KOF Swiss Economic Institute at ETH, a University in Zurich, said the Swiss delegation would have to make a substantial offer to win a reprieve from the 39% tariff, with the visit representing a last-ditch effort to negotiate down the import duty.
“Something marginal won’t be enough — it has to be a significant number, which Trump can present to his supporters as a victory for his negotiations,” said Gersbach.
“It’s crucial Keller-Sutter and Parmelin meet Trump and speak with him directly. He is the decisionmaker,” added Gersbach, who thinks there is a reasonable chance of success.
The Swiss government knows how serious the situation is, and is putting all its efforts into getting a deal, he said.
“A 39% tariff on Switzerland, especially with the EU agreeing a rate of 15%, would be an immediate shock to the Swiss economy,” said Gersbach.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.