US Tariffs To Slow Down Swiss Economic Growth Further In 2026

Swiss economic growth is expected to slow in 2026, following a "significantly below-average" performance this year, as higher US tariffs further cloud the country's outlook.

The Swiss government projected economic growth of 1.3% this year on Thursday. The government forecasted that GDP would ease further to 0.9% next year. That is the lowest level since the economy contracted 2.4% in 2020 during the COVID-19 pandemic.

"Uncertainty surrounding international trade and economic policy remains high and continues to shape the outlook for both global and Swiss economic growth," the State Secretariat for Economic Affairs (SECO) said in a statement. "In Switzerland, above-average growth in the first quarter was followed by a significant slowdown, as anticipated."

US President Donald J. Trump had announced a tariff rate of 31% for Switzerland in April as part of a broad push to reorder global trade. The White House increased the rate to 39% on August 7 on almost $61 billion in goods that Switzerland exported to the US — about one-sixth of its total exports.

Switzerland's top four exports include chemicals and pharmaceuticals, machines and electronics, watches and precision instruments, according to data from the Federal Office for Customs and Border Security. Branded and patented pharmaceutical products are subject to 100% tariffs upon entry into the U.S., unless their manufacturers have or are building production facilities in the U.S.

The tariffs will impact Swatch Group AG, Compagnie Financière Richemont SA, Logitech International SA, and Nestlé SA will he tariffs. Watch and luxury goods maker Swatch reported that the US represented 18% of its global sales in 2024.

"The impact of the US tariffs, if they stay at 39%, could be devastating for numerous brands in Switzerland," Jean-Philippe Bertschy, an analyst at Vontobel, said in August.

Swiss-US Efforts Fail to Resolve Tariff Disagreement

Swiss President Karin Keller-Sutter traveled to Washington in August, reportedly on a "hastily arranged trip" to avert the crippling tariffs. However, she left empty-handed, according to Reuters.

Keller-Sutter had sought a tariff rate of 10%, which US officials rejected. She described her meeting with US Secretary of State Marco Rubio as "very good." She did not answer a question about what further offers Switzerland would make.

The White House accused Switzerland of refusing to make "meaningful concessions" by dropping trade barriers. "Switzerland, being one of the wealthiest, highest income countries on Earth, cannot expect the United States to tolerate a one-sided trade relationship," a White House official said.

In May, US Trade Representative Jamieson Greer and Secretary of the Treasury Scott Bessent met with Keller-Sutter in Geneva. Both sides agreed to accelerate negotiations on reciprocal trade, although they were unable to reach an agreement.

Swiss Manufacturers Warn of Tariff-Related Job Losses

Swissmem, the leading trade association representing the Swiss technology industry, has warned that the knock-on effects. They could hurt "social security, the healthcare system and to maintain infrastructure."

The Swiss tech industry had already reported nine consecutive quarters of declining sales in August, compared to the prior-year period. The decline happened even before the imposition of US tariffs.

"The political uncertainty impacted heavily on demand for investment goods in the second quarter," Swissmem Director Stefan Brupbacher said on August 28. "We are currently in a dangerous downward spiral, and the knock-on effect is being accentuated by the US tariffs."

The tariff war with the US has impacted economic sentiment in Switzerland. The rating has remained negative for nine of the past 12 months, up to September. Consumer sentiment was negative over the entire 12-month period, with a reading of 37 in September, although slightly higher than the four-month low of 40 in August.

"Swiss economic growth was shaped by trade developments in the first half of the year and will likely remain driven by this uncertainty in the coming quarters," UBS said on September 9. "If US tariffs remain at the current level, Swiss GDP growth could fall far below current forecasts."

Swiss exports to the US in August plunged 22%, its weakest level since late 2020, as tariff curbed demand. Weighed down by tariffs, global sales of watches fell 8.6%, while jewelry dropped 7.5%.

Swiss Equities May Perform Better Than Expected

Despite concerns about US tariffs, UBS expects Swiss equities to maintain positive earnings growth. The investment bank has forecasted 4% profit growth for the Swiss Market Index (SMI) in 2025 and 5% in 2026, according to a report released by UBS on Thursday.

UBS has anticipated "decent" third-quarter earnings. However, companies sensitive to economic developments still lack positive momentum from macroeconomic indicators, though conditions have not significantly worsened, according to UBS.

The Swiss Franc has climbed about 14% against the US dollar. This significant appreciation will put additional pressure on Swiss exports, making them more expensive for foreign buyers and potentially reducing demand, especially for products already struggling with tariffs.

"Overall, however, downside risks currently dominate," SECO said. "A deterioration in the international environment cannot be ruled out. Financial markets remain vulnerable to significant corrections."

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