US-Switzerland Trade Deal Analysis: 39% Tariff Negotiations and Economic Impact

This analysis is based on recent developments in U.S.-Switzerland trade negotiations, where President Donald Trump confirmed on November 10, 2025, that White House officials were “working on a deal to get the tariffs a little lower” [1][2]. The 39% tariffs imposed on Swiss imports in August 2025 have created significant economic disruption, particularly for Switzerland’s luxury watch industry, which saw exports to the U.S. plummet 55.6% in September to 157.7 million Swiss francs ($198.5 million) [3][4].

The tariff impact extends beyond immediate trade flows to affect Switzerland’s broader economic outlook. The Swiss government slashed its 2026 GDP growth forecast to 0.9% from 1.2%, with the economy projected to grow only 1.3% in 2025, described as “significantly below-average” [7]. One economist estimated the tariffs could reduce Swiss GDP by 0.86% over two years [7], demonstrating the substantial macroeconomic consequences of these trade measures.

Corporate responses have been strategic but revealing. Breitling CEO Georges Kern called the 39% tariffs “horrible” and “terrible news” for Switzerland while criticizing Swiss politicians: “Swiss politicians weren’t very well prepared” for dealing with the Trump administration [5][6]. Kern’s statement that Breitling increased global prices by 4% to offset tariff costs rather than passing the full 39% to U.S. consumers highlights the premium segment’s pricing power and adaptability [6].

Kern’s criticism reveals a fundamental strategic gap between traditional diplomatic approaches and Trump’s business-oriented negotiation style. The CEO’s observation that Swiss officials didn’t understand “how to negotiate with the business people of the Trump administration” suggests this misalignment may have contributed to the harsh initial tariff rate [5][6].

The Swiss watch industry demonstrated some foresight by front-loading shipments in July ahead of tariff implementation, which explains why year-to-date exports to the U.S. remain up 10.4% despite the September collapse [3]. However, this strategic stock positioning proved unsustainable, leading to the dramatic September decline.

Swiss watch stocks rallied significantly on Trump’s conciliatory remarks, with Swatch Group gaining 4.2% and Richemont up 2% [4]. This demonstrates how market participants are highly sensitive to negotiation progress and suggests investors anticipate a favorable resolution.

The 39% tariff rate represents one of the most aggressive trade measures in Trump’s 2025 tariff campaign, reflecting his administration’s focus on addressing trade imbalances [1]. This punitive rate far exceeds typical trade dispute resolutions and signals a more confrontational approach to trade negotiations with traditional allies.

• Economic Damage Continuation:
  Prolonged tariff implementation could further depress Swiss economic growth, with current forecasts already showing significant weakness [7]
• Market Share Loss:
  Extended trade barriers may allow competitors from other regions to gain market share in the U.S. luxury goods sector
• Supply Chain Disruption:
  The September export collapse created inventory management challenges for U.S. retailers and could lead to longer-term supply chain restructuring [3][4]

• Negotiation Resolution:
  Reports suggest a potential deal could reduce tariffs to 15%, matching EU rates [3], which would provide significant relief
• Strategic Market Diversification:
  Companies may accelerate expansion into European and Asian markets, though the U.S. remains the largest single market by value [3]
• Pricing Power Validation:
  Luxury brands’ ability to implement global price increases demonstrates strong brand equity and pricing flexibility [6]

The negotiations appear to be progressing rapidly, with Trump’s November 10 statement suggesting imminent resolution. However, no specific timeline was provided [1][2], creating uncertainty for business planning.

• 39% tariffs imposed on Swiss imports in August 2025 [1][2]
• Swiss watch exports to U.S. down 55.6% in September 2025 [3][4]
• U.S. remains Switzerland’s largest watch market, worth CHF 3.5 billion for first nine months of 2025 [3]
• Year-to-date exports to U.S. still up 10.4% due to front-loading [3]

• Switzerland’s 2026 GDP forecast cut to 0.9% from 1.2% [7]
• 2025 growth projected at only 1.3%, “significantly below-average” [7]
• Tariffs could reduce Swiss GDP by 0.86% over two years [7]

• Breitling increased global prices by 4% to offset tariff costs [6]
• Companies demonstrating pricing power in luxury segment [6]
• Stock market rally on positive negotiation news [4]

• Trump confirmed working on deal to lower tariffs [1][2]
• Potential target rate of 15% suggested in reports [3]
• No specific timeline provided for resolution [1][2]