Why Trump hit Switzerland with a 39% tariff—and what it means for trade and diplomacy

US President Donald Trump

A political storm has erupted in Switzerland after US President Donald Trump imposed a 39% tariff on Swiss goods—an unexpectedly harsh blow announced on August 1, Switzerland’s national day. The move has stunned officials in Bern, infuriated businesses, and embarrassed Swiss President Karin Keller-Sutter, who believed she was close to securing a far more favourable deal, the Financial Times reported.

“A disastrous call” and a failed negotiation

According to multiple sources, Keller-Sutter held a tense 30-minute phone call with Trump last Thursday. She had expected to finalize a deal involving a 10% tariff, matching what the UK received. Instead, Trump rejected the offer outright, fixated on Switzerland’s $39 billion trade surplus and what more the “very wealthy” Alpine nation could give.

“There was nothing Keller-Sutter could say,” said one official briefed on the call. “Trump saw 10% as a non-starter and accused Switzerland of stealing from the US”

The result: a punitive 39% tariff—among the highest globally and even more severe than the 31% rate Trump had imposed on Switzerland back in April.

Blame game erupts in Bern

Swiss media reacted with outrage. SonntagsZeitung called it Keller-Sutter’s “biggest fiasco,” while Blick compared it to Switzerland’s worst military defeat—the Battle of Marignano in 1515.

The diplomatic fallout has deepened internal rifts. While Keller-Sutter has taken most of the political heat, some officials and business leaders blame Switzerland’s powerful pharmaceutical industry for provoking Trump’s ire. Notably, Roche and Novartis recently received letters from the Trump administration demanding lower drug prices.

“They ship enormous amounts of pharmaceuticals to our country,” said US trade representative Jamieson Greer. “We want to be making pharmaceuticals in our country.”

Swiss investment wasn’t enough

In April, Swiss officials had expressed confidence in reaching a quick agreement, offering a pledge of nearly $150 billion in US-bound investments—per capita, more than what Japan or the EU committed. But that wasn’t enough to sway Trump, who insisted on more.

Switzerland has no industrial tariffs of its own and is one of the largest investors in the US, with companies like Nestlé, Roche, and Breitling employing thousands of Americans. Yet Trump’s demand for “reciprocity” prevailed—despite the fact that gold and pharmaceutical exports, which dominate the trade imbalance, are exempt from the tariffs.

A painful lesson in power politics

Swiss officials, unused to high-stakes brinkmanship, have acknowledged the miscalculation. “We are not good at international power politics,” one person close to the talks admitted. “It was a painful lesson.”

As the Swiss stock market prepares to reopen, investors are bracing for losses. Pharma giants Roche and Novartis, along with Swatch, Richemont, and Nestlé, could face sharp declines.

Despite the setback, the Swiss-American Chamber of Commerce says talks may resume. “We need to figure out what else we can offer,” said its CEO, Rahul Sahgal. “We still think a better deal is possible.”