Executive Summary
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Swiss officials on Thursday downwardly revised their 2026 economic growth forecasts, attributing the adjustment primarily to the impact of U.S. tariffs. Switzerland, an export-driven economy, currently faces a 39% U.S. tariff rate on many goods, making it one of the countries most significantly affected by the Trump administration’s trade policies. Economists are warning of mounting risks, with projections indicating a potential recession.
Revised Economic Outlook
Switzerland’s government held its 2024 economic growth forecast at 1.3%, noting this figure is “significantly below-average” for the nation. For 2026, however, officials now project gross domestic product (GDP) growth to slow to 0.9%, a reduction from the previous forecast of 1.2%.
“Higher U.S. tariffs have further clouded the outlook for the Swiss economy,” officials stated in a news release. They emphasized that the current trade policy environment presents particular challenges for Switzerland, with additional tariffs placing a “heavy burden” on affected sectors and export-oriented companies, leading to expected ripple effects across the broader economy.
Impact of U.S. Tariffs
The U.S. was the top foreign destination for Swiss goods in 2024. In August, Switzerland was subjected to 39% tariffs on goods entering the U.S. after a Swiss delegation failed to secure a trade deal with U.S. officials. This rate is among the highest country-specific tariffs imposed by the Trump administration.
Beyond the general tariff, branded and patented pharmaceutical products from Switzerland are now subject to 100% tariffs upon entry to the U.S., unless their manufacturers establish or are building production facilities in America. Swiss officials highlighted that most of America’s other trading partners have been granted lower tariff rates, placing Swiss exporters at a competitive disadvantage in the U.S. market.
The government’s update indicated that under current trade conditions, global demand for Swiss goods and services is expected to rise “only modestly.” Officials noted that White House trade policy holds significant influence over Switzerland’s economic trajectory, suggesting that an agreement with the U.S. or an easing of international trade policy would lead to a more favorable development.
The Strengthening Swiss Franc
Adding to Switzerland’s economic challenges is the demand for the Swiss franc. The currency, often regarded as a safe-haven asset during periods of global volatility, has gained more than 12% this year amid persistent uncertainty. This appreciation creates headwinds for the country’s central bank by exerting downward pressure on prices, complicating efforts to avoid disinflation and negative interest rates.
Swiss officials cautioned that further strengthening of the franc remains a possibility, especially if a deterioration in the international environment, such as a market correction, global sovereign debt issues, or geopolitical shifts, were to materialize.
Economists’ Perspectives
Charlotte de Montpellier, senior economist for France and Switzerland at ING, told CNBC that “risks for the Swiss economy are mounting.” She estimated a cumulative direct impact of the 39% U.S. tariffs on Swiss GDP of approximately 0.86% over the first two years. De Montpellier recently revised her own 2026 growth forecast for Switzerland down to 0.8%, almost half her initial projection for the year.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, echoed these concerns, stating that the new forecasts align with her own. Debono expects the Swiss economy to enter a recession in the second half of this year, projecting a 0.2% quarter-to-quarter fall in GDP for both Q3 and Q4. She cited declining goods exports and falling investment as key factors.
Industry Response
Georges Kern, CEO of Swiss luxury watchmaker Breitling, described the U.S. tariffs as “terrible news” for Switzerland. He noted that Breitling had increased prices globally by 4% to offset the tariff impact, leveraging the pricing power available to luxury brands. Kern expressed confidence that a “much better solution” would be found with the Trump administration, whom he characterized as “businesspeople.”
Outlook
Switzerland’s economic outlook is clouded by the dual pressures of U.S. tariffs and a strong domestic currency. The revised growth forecasts reflect a challenging environment for the export-oriented nation, with economists and industry leaders pointing to significant downside risks if current trade conditions and currency trends persist.
