Impact of Trump's Tariffs: Switzerland Cuts GDP Forecast Amid Economic Struggles

Switzerland Slashes GDP Forecast Amid Impact of Trump Tariffs on Economy

October 16, 2025 — The Swiss government cuts its growth forecast for 2026. They point to high US tariffs as the main cause. The tariffs come from the Trump era and hit trade hard.

Economic Forecast Revision

Swiss leaders keep the 2025 growth forecast at 1.3%. This rate sits well below earlier trends. They now set the 2026 GDP growth at 0.9% instead of 1.2%. A public note shows “higher US tariffs” bear on the outlook. The extra cost weighs on Swiss industries that depend on exports.

Impact of U.S. Tariffs on Swiss Exports

Switzerland banks on exports. In 2024, the US stood as the largest market for Swiss goods. Trade tensions have led the US to add tariffs as high as 39% on Swiss items.

Key export sectors include:

Watches
Pharmaceuticals
Precious metals
Chocolate and skincare products

Pharmaceutical goods are hit hard. They now face a 100% tariff if manufacturers do not build or grow production in the US. This rule puts Swiss items at a clear disadvantage.

Trade Policy Challenges and Market Uncertainty

Swiss officials see the world demand for Swiss goods growing slowly. Trade sectors feel high strain from these tariffs. Some effects can spread to slow the wider economy.

Officials watch changes in US trade policy. A new deal or a drop in tariffs might bring better times. For now, risks remain high.

Swiss Franc’s Strength Poses Additional Headwinds

The Swiss franc stands strong as a safe coin. It has grown more than 12% this year. This growth cools prices and makes it hard for the national bank to fight a drop in prices or very low rates.

Leaders warn that if the franc grows even stronger, problems may pile up. Global risks like rising tensions or debt issues can add more force.

Expert Insights: Risks Mounting for Switzerland’s Economy

Charlotte de Montpellier, senior economist at ING, sees more risk ahead. She marks about 4% of Swiss GDP coming from the US. She estimates that the 39% tariff can cut GDP by about 0.86% in two years.

She now predicts a 0.8% growth rate for 2026. That is nearly half of the early forecast. She warns that slow exports might lead some quarters to shrink.

Melanie Debono, a senior economist at Pantheon Macroeconomics, shares these views. She sees Swiss GDP shrinking in the later half of 2025. Falling exports and low investment feed into the worry. She predicts a 0.2% drop in GDP each quarter in Q3 and Q4. ### Conclusion

Switzerland’s new GDP cut and the heavy US tariffs show the tough spot the country faces in trade today. With uncertain trade rules and a strong currency, the near-term view stays dim. As trade talks and policy shifts continue, Swiss growth rests on solving these trade issues and handling currency change.

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