39% tariffs will end after three months: Switzerland reaches agreement, US tariffs reduced to 15%.

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The United States and Switzerland reached a trade agreement on Friday, agreeing to lower tariffs on Swiss goods from 39% to 15%, which will soon end the US’s extremely high tariffs and trade disputes with Switzerland. This breakthrough agreement brings much-needed economic relief to Switzerland, the developed country most impacted by US tariffs.

On Friday during early US stock trading, the Swiss government announced on social media that US tariffs on Switzerland would be lowered to 15%, the same level as the EU. This means the 39% tariff imposed by the US on Switzerland for more than three months will be cut by more than half. According to CCTV news, on July 31 local time, Trump signed an executive order setting Switzerland’s tariff rate at 39%, the highest the US has ever imposed on any developed country.

After confirmation of the agreement by the Swiss government, the Swiss stock index narrowed its decline to 1.1%, and mid-cap index losses narrowed to less than 1.6%. The Swiss franc, which hit a four-week high before the US market opened, narrowed its gains, while the USD/CHF exchange rate rebounded above 0.7900 after dropping more than 0.6% earlier, nearly erasing intraday losses.

US Trade Representative Greer confirmed to the media just before the US market opened on Friday that the US and Switzerland have “basically reached an agreement,” stating that details will be published later on the White House website.

The agreement is a major benefit for this highly export-dependent economy. Punitive tariffs have caused Switzerland’s economy to potentially shrink in the third quarter, with unemployment rate reaching its four-year high.

Swiss Government: Thanks Trump for Constructive Engagement

When announcing the agreement, the Swiss government expressed special thanks to US President Trump for his constructive engagement and said that Swiss Economy Minister Guy Parmelin’s recent meetings with Greer had been “productive.” Parmelin is scheduled to hold a press conference at 4pm Central European Time in Bern, Switzerland’s capital, to provide further details about the agreement.

This agreement is the result of months of diplomatic lobbying by Swiss government officials and business leaders. Since being hit with 39% tariffs last August, Swiss industries such as watchmaking, machinery, and precision instruments have been severely impacted.

WallstreetCN previously mentioned that media learned on Monday this week that Switzerland would finalize a 15% tariff agreement with the US. The key to pushing negotiations forward was a meeting last week between Swiss business leaders and Trump at the White House, after which Trump immediately instructed the US Trade Representative to accelerate direct talks with Switzerland.

According to Greer, the 15% rate includes the most-favored-nation rate and certain existing tariffs, similar to arrangements with the EU. He emphasized: “We retain tariffs on these countries because we must control the trade deficit. But because Switzerland has agreed to manage its trade surplus with the US, and ensure that companies with surpluses in pharmaceuticals and gold build factories in the US, this will eliminate part of the surplus.”

US Emphasizes Manufacturing Reshoring and Investment Commitments

Greer revealed to media that, as a condition, Switzerland pledged to invest $200 billion in the US during Trump’s term, with $70 billion invested next year, covering industries such as pharmaceuticals, gold refining, and railway equipment. Greer said Switzerland also promised to purchase more Boeing commercial aircraft.

Greer said: “We are very excited about this deal and what it means for US manufacturing.”

The US specifically mentioned that Swiss pharma giant Roche had pledged earlier this year to invest $50 billion in the US. Greer stated that such investments would help balance the US trade deficit with Switzerland. The Trump administration has long regarded the trade deficit as "theft" against the US, which was a main reason for imposing high tariffs on Switzerland.

In 2024, the US goods trade deficit with Switzerland stood at $38.3 billion, expanding to $48 billion in the first half of 2025. However, the Swiss government believes that if its $29.7 billion services trade surplus in 2024 is included, the US’s overall trade deficit with Switzerland last year was only about $8.6 billion.

39% Tariff Severely Impacted Swiss Economy

The trade dispute between Switzerland and the US took a dramatic turn over three months ago, when Trump overturned a previously approved agreement framework by the US Treasury Secretary and Trade Representative at the last moment.

On July 31, just 10 hours before the new tariff was to take effect, Trump, during a call with Swiss Federal President Keller-Sutter, angrily demanded more concessions and ultimately almost arbitrarily chose the 39% tariff rate.

On August 7, the 39% tariff officially took effect — the highest imposed by the US on any developed country. In early August, Keller-Sutter and the Swiss Economy Minister flew to the US with an amended agreement framework, but never even met with Trump.

Punitive tariffs have had a real impact on the Swiss economy. The Swiss central bank stated the economic outlook has “deteriorated due to US sharply raising tariffs.” LGT Bank has lowered its forecast for Swiss real GDP growth in 2025 from 1.1% to 0.9%. The unemployment rate has risen to its highest in four years.

The impact on Switzerland’s watch industry is particularly pronounced. According to Xinhua News, Swiss watch exports to the US in September plunged about 56% year-on-year. Swatch Group CEO Nick Hayek said all the company’s products are produced in Switzerland and costs are already high, and “with nearly 40% tariffs, it’s simply unsustainable.”

The report notes that Swatch Group owns well-known brands such as Omega, and the US market accounts for nearly 17% of its exports.

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