Switzerland is not the only country to be hit by seemingly arbitrary tariffs since Trump began his second term as US president, but it has landed the highest tariff levels in Europe.
The US’ official explanation for such high tariffs is the $40-billion trade deficit (that is, Switzerland imports more goods into the United States than purchases from it).
But even though this is factually correct, Swiss media reported the obvious flaw in this thinking - that is, Trump has ignored the two countries' vastly different market sizes.
Proportionally, the 9 million people who live in Switzerland spend significantly more per capita on US products than the more than 340 million Americans spend on Swiss imports.
Although US tariffs are paid by American businesses and consumers, they also affect the country they are levied on by making their imports more expensive and therefore less attractive to a US market.
Switzerland, therefore, "remains firmly committed to pursuing discussions with the US with the aim of reducing these tariffs as swiftly as possible,” the Federal Council said.
This plan could, however, backfire and not only due to the two countries' widely divergent negotiating tactics: according to Swiss negotiation expert Frédéric Mathier, "Trump wants a stage, not a lecture. If you don't give him the feeling that he is the boss, the shutter goes down immediately."
Another reason for a potential failure is laid out in an article by the UK's Financial Times, which claims that the government's inability to renegotiate the tariffs is due to - as the newspaper calls it - a ‘structural vulnerability’ of Switzerland's political system
What exactly does this mean?
It may be virtually impossible for Switzerland to wipe out the trade deficit, not only because — logically — its capabilities are much smaller than the EU’s (which negotiated a 15-percent tariff), but also due to the nature of its political and economic mentality.
“Switzerland negotiates from a place of institutional constraint and realism,” the FT said. “The Swiss government typically makes offers it can fulfil — often tied to what is politically and constitutionally possible.”
In other words, the government doesn’t make promises it knows it cannot deliver — either because it lacks the capacity to do so, or because its laws prevent it.
That stands in stark contrast to more expansive political promises made by larger actors, such as the EU’s $750 billion US energy investment pledge.
“Switzerland has a reputation for delivering on its commitments. But that can be a weakness in a world that rewards drama and ambition,” Hans-Peter Portmann, a Swiss banking executive and politician serving in the country’s upper house told the FT. “That’s a problem when you’re up against Trump.”
And then there are the aforementioned ‘structural’ challenges
“Swiss diplomacy is also hindered by structural features: a seven-member Federal Council with a rotating presidency, direct democracy mechanisms that can force referendums on key issues, and a tradition of neutrality that limits geopolitical leverage,” Portmann pointed out.
“The Swiss president cannot unilaterally offer $30 billion in investment without risking a domestic political backlash or a vote,” he added.
At the end of the day, as the FT suggests, Switzerland's “internal options are limited and politically sensitive. Switzerland could propose direct investment into US industrial regions in exchange for tariff relief. But there’s no mechanism for the government to commit private capital on behalf of companies.”
So is Switzerland’s political system responsible for its inability to offer a more enticing deal to the United States?
In a way, it is.
That’s because, unlike other countries, where political decisions are made at the top and then trickle down to be followed by the population, in Switzerland it is the other way around.
Think of the Swiss system as an inverted pyramid: people, the main policy makers rather than mere recipients of decisions passed down from the upper echelons, are at the top.
In other nations, the elected officials make decisions on behalf of their constituents. But in Switzerland, a centuries-old tradition of direct democracy gives people — rather than lawmakers — the power to shape local and national policies.
That is the main reason why the government cannot unilaterally commit unlimited funds, or any other resources, to win Trump’s approval.
It is not unlikely that if the Federal Council succeeds at working out a better tariff deal for Switzerland, the voters will have the last word — pretty much the way they will when approving (or not) the new bilateral treaties Bern had negotiated with the European Union in 2024.
So Switzerland really is limited by both its mentality of responsible governance and its powerlessness to act unilaterally - although given Trump's notorious unpredictability, there's no guarantee that the tariff levels won't change again some time in the future.
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