Swiss business lobby warns Trump tariff turmoil could escalate

The steel production site of Stahl Gerlafingen AG in Gerlafingen in canton Solothurn, Switzerland, in September 2023. Keystone / Christian Beutler

US President Donald Trump announced plans this week to impose 25% tariffs on all foreign steel and aluminium. The prospect of new trade wars across the globe brings back bad memories in Switzerland, where national industries risk once again getting caught in the middle, says Jean-Philippe Kohl, deputy director of Swissmem, the association for Switzerland’s mechanical and electrical engineering industries.

SRF: How worried are you about the recent tariff turmoil?

Jean-Philippe Kohl: We are genuinely concerned by the news that tariffs will be imposed on steel and aluminium imports to the United States. This also affects our industry, even if our export volume of steel and aluminium to the US is relatively low. The whole thing could escalate, and suddenly much broader product groups will be affected.

Swiss tech industry exports to the US amount to around CHF10 billion ($11 billion) and steel and aluminium exports account for around CHF80 million of this, or around 0.8%.

SRF: How does this compare with exports to the European Union?

J-P. K.: We export around CHF2.7 billion worth of steel and aluminium to the EU, much more than to the US. If the EU reacts with countermeasures to new US tariffs and if it wants to treat Switzerland as a third country again, then we have a severe problem.

SRF: The experience last time was drastic, wasn’t it?

J-P. K.: Yes, the EU took protective measures at the time due to fears that China would export more steel to Europe. These protective measures were tariffs of up to 25% if a certain export volume was exceeded.

Switzerland was regarded as a third country. We were able to export within a quota. However, we also had to pay these customs duties. In practice, we were in this quota together with other countries. And this quota was exhausted so quickly that our companies ran into the 25% limit and were therefore no longer able to export to the EU.

SRF: What did Switzerland do at the time to alleviate the problem for industry?

J-P. K.: Our authorities worked to ensure that Switzerland was not considered a third country and that we were treated like European Economic Area (EEA) states – for example, like Norway, Iceland and Liechtenstein. But that didn’t work. The EU didn’t listen at the time.

SRF: And you hope that this will not happen again?

J-P. K.: Yes, we have the justified expectation that this will not happen again. Switzerland and the EU are about to finalise the Bilateral Agreements III and have assured each other that they will do everything in their power to ensure that the agreements are ratified. If Switzerland were to be regarded as a third country by the EU again, if we had to pay such high customs duties again, then this principle would be torpedoed.

SRF: Don’t you think the EU could use this as leverage in the discussion about Bilaterals III, as you call it?

J-P. K.: That would be counterproductive. Knowing the sensitivities of the Swiss population, there would be a negative attitude towards the new agreements. That can’t be in the interests of the EU.

What is your opinion? Join the debate:

Adapted from German by DeepL/sb/ts