Trump’s Tariffs Hit Swiss Exporters Hard

Companies Grapple with 39% Duties, Explore Job Protection Measures

Swiss businesses face significant disruption as President Donald Trump’s imposed 39% customs duties threaten to impact exports and subcontractors alike. With the economic climate already challenging, firms are turning to temporary unemployment schemes to mitigate job losses.

Partial Unemployment as a Buffer

The Swiss government has acknowledged the severity of the blow, with Confederation President Karin Keller-Sutter noting that partial unemployment, known as RHT (reduction of the work schedule), is a key tool for companies to absorb the shock. She has also pledged an open door for discussions on reducing bureaucracy and improving general business conditions.

Adding to the potential strain, the maximum duration for unemployment compensation has been extended to 18 months, a measure implemented in May due to tense economic conditions. Unions are advocating for a further extension to 24 months, proposing this in a parliamentary initiative.

Job Security Fears Mount

Economists warn of substantial repercussions for the Swiss labor market. Hans Gersbach, co-director of the EPFZ Conditional Research Center (KOF), anticipates a significant rise in partial unemployment and subsequent job cuts. He expressed concerns that the substantial tariff surcharge will severely damage the competitiveness of Swiss manufacturers, potentially leading to production relocations.

Subcontractors Feel the Ripple Effect

In the Jura region, companies specializing in subcontracting, particularly within the watchmaking sector, are bracing for indirect impacts. Many supply Swiss partners who then export their goods. Businesses have already been implementing partial unemployment due to existing economic pressures like a strong franc and declining activity.

G & Y Leuenberger SA, a firm involved in watchmaking components and connectors, has utilized partial unemployment since March. Director Boris Leuenberger fears losing clients who are directly affected by the new tariffs. He voiced concerns about heightened cost pressures from partners or a direct shift to sourcing from the Eurozone.

“We risk seeing partners who put crazy pressure on costs, on our prices or that will directly obtain from the euro zone.”

—Boris Leuenberger, Director of G & Y Leuenberger SA

Leuenberger expressed frustration with the Federal Council and the perceived failure of negotiations. He stressed the need for robust government support for the industry and microtechnology sectors to avert catastrophic long-term losses and preserve the region’s vital know-how.

The situation has been likened to a “time bomb” by those affected, who worry about the erosion of skills and the potential loss of Switzerland’s distinctive industrial identity.

The Swiss franc has seen a slight appreciation against the US dollar in recent weeks, indicating continued market sensitivity to global trade developments. As of late, the franc traded around 0.91 USD.