BREAKINGVIEWS-Switzerland’s best Trump gambit: export more fudge

By George Hay

LONDON, Aug 6 (Reuters Breakingviews) - Switzerland is known for punctuality, neutrality and precision engineering. None of these qualities are especially helpful for President Karin Keller-Sutter, who has travelled to the United States in a last-ditch attempt to bargain down the 39% tariffs her counterpart Donald Trump plans to impose on imports from the Alpine nation. Given the no-win situation, her most valuable export may be fudge.

The source of Trump’s ire is Switzerland’s large bilateral trade surplus in goods. In 2024 the country exported $44 billion more to the U.S. than came the other way. However, two-thirds of that was pharmaceutical products made by the likes of Roche ROG.S and Novartis NOVN.S, whose products are not covered by Trump’s country-specific tariffs. The U.S. levy, due to kick in on Thursday, will instead push up the cost of imported Rolex watches and Lindt chocolates.

Keller-Sutter has a proven template to persuade Trump to reconsider: make flashy promises to invest in the U.S. or purchase more of its stuff. The European Union managed to shrink its wider tariff to 15% in part by pledging to increase foreign direct investment stateside by $600 billion over three years. Japan reached the same tariff level by offering $550 billion over a similar time span.

The catch is that the Swiss government has already tried this gambit. In April it proposed over $150 billion more U.S. investment by its companies over four years – an annual rise of more than twice the actual increase between 2023 and 2024, according to Bureau of Economic Analysis data. Per head of population, the Swiss pledge was ten times the EU’s offer.

Trump’s decision to push ahead with punitive tariffs implies Keller-Sutter will have to go larger. This will be tricky. For example, Roche has already promised to invest $50 billion in the U.S. The $253 billion company will probably be loath to pledge more as Trump has not finalised a separate sectoral tariff on pharma imports but has hinted the rate will at least initially be relatively low.

Keller-Sutter’s other options don’t look great, either. Swiss tariffs on U.S. imports are already zero, and the country cannot loosen restrictions on agricultural imports without upsetting its powerful farmers. Buying more U.S. defence equipment also carries political baggage, since the Trump administration earlier this year said it could hike the price of a consignment of F-35 jets by as much as $1 billion.

The logical way forward is to mimic Trump by exaggerating and dissembling. Both the EU and Japan have been noticeably vague about their FDI promises: EU officials admit their figure is based on what European companies have “expressed interest” in spending. Japan’s trade negotiator meanwhile said that only a small fraction of the $550 billion might be direct investment rather than fuzzier state-backed loan guarantees.

As such Keller-Sutter may need to conjure up a bigger headline number, perhaps spread over a greater number of years, backed by high-profile Swiss companies. If she succeeds, a Swiss capacity for fudge may join the country’s better-known qualities.

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CONTEXT NEWS

Swiss President Karin Keller-Sutter and Business Minister Guy Parmelin flew to Washington on August 5, Switzerland’s government said, to try to avoid the 39% tariffs announced by President Donald Trump on exports to the United States.

The pair 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. Keller-Sutter will meet U.S. Secretary of State Marco Rubio on August 6, the State Department said.

The Swiss government said on August 4 it was ready to make a “more attractive offer” to the United States as it sought to avoid a 39% tariff, due to take effect on August 7, which would damage Switzerland’s economy.

The Federal Council, the governing cabinet, held an emergency meeting and said it was ready to pursue negotiations beyond the August 7 deadline.

The government gave no details of what extra incentives could be offered to secure a better deal, but it did say it was not considering any countermeasures against the U.S.

The aim of Keller-Sutter and Parmelin’s trip was to present “a more attractive offer to the United States in a bid to lower the level of reciprocal tariffs for Swiss exports, taking U.S. concerns into account,” the government said.