Swiss Exports to US Collapsed in First Month of 39% Tariff

(Bloomberg) — The highest US tariff among developed nations dealt a severe blow to Swiss exports there, according to the first reading since the 39% levy took effect, but increased shipments to other countries could offset some of the fallout.

Foreign sales to America excluding gold, adjusted for seasonal swings, were 22% lower in August than in July. That includes significantly fewer watch exports. Imports from the world’s biggest economy held steady.

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The US trade deficit with Switzerland narrowed by roughly a third to 2.06 billion francs ($2.6 billion), from 2.93 billion francs the previous month. August’s reading is the second lowest since 2020, according to Bloomberg calculations based on Swiss customs office data.

Gold exports to the US collapsed even more markedly, dropping 99% compared to July, to 0.3 tons.

The significant imbalance in goods trade was the reason for US President Donald Trump’s Aug. 1 announcement of the tariff, which took effect on Aug. 8.

Still, total Swiss exports were largely unfazed by the hit to US trade. Higher shipments to European countries — including France, Austria and Poland — as well as Canada and Mexico helped to offset the dent, resulting in a retreat of just 1% from a month earlier.

Goods on which the US tariff applies saw significant declines. Compared to July, Switzerland exported 8.6% fewer watches. Pharmaceuticals — so far exempt from the levy — saw a 1.3% decrease.

A last-ditch attempt by the Swiss government in early August to sway the US President proved unsuccessful, though talks have continued since and Bern is still pushing to secure a lower rate. US Commerce Secretary Howard Lutnick said last week that Washington will “probably get a deal done with Switzerland” — though he didn’t provide details.

Negotiations with the US are a balancing act for Swiss negotiators, especially on the issue of agriculture which is domestically sensitive due to a belief in self-reliance. In an interview on Wednesday, the head of the Swiss farmers’ lobby rejected ideas to allow American producers to import more beef or poultry.

While the Swiss economy has shown resilience so far, the government said that it expects slower growth this year due to the US levies. Switzerland is trying to diversify its dependencies, including with a new free trade agreement with the South American Mercosur bloc that was signed this week.

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—With assistance from Kristian Siedenburg, Allegra Catelli and Jack Ryan.

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