(Bloomberg) — On July 4, as the US celebrated Independence Day, Switzerland’s top circle of ministers also had reason to rejoice. They’d secured a deal to avoid punitive tariffs from Donald Trump — or so they thought.
Most Read from Bloomberg
Three and a half weeks passed before Swiss President Karin Keller-Sutter or anyone else in the cabinet realized things were about to go horribly wrong. When Trump announced his tariff verdict, Switzerland was handed the highest levies in the developed world.
The shock hit just hours before the country’s own national holiday on Aug. 1, prompting Keller-Sutter to make a last-ditch trip to Washington to rescue the situation. Instead, she was ghosted by the White House.
“We had, on the 4th of July if I recall, no signs that there would be a problem,” Vice President Guy Parmelin said on Thursday, the day a very different reality descended on Switzerland with the imposition of 39% tariffs — more than double the European Union’s rate.
The disastrous outcome brought home Switzerland’s lack of leverage in an era of global instability and the misguidedness of trusting conventions when dealing with Trump. It leaves Swiss executives trying to figure out how to compete in the world’s biggest market and voters wrestling with the future of the country’s go-it-alone strategy.
This account of how Switzerland went from “the front of the queue” for a deal with the US to an economic nightmare is based on conversations with multiple people in Bern, Zurich and Washington, who requested anonymity describing private discussions.
The Swiss government declined to comment on the details of the negotiations. The White House and Commerce Departments did not immediately respond to requests for comment and the Treasury Department declined to comment.
On April 24, three weeks after Trump announced his sweeping tariffs on the world, Parmelin and Keller-Sutter met with US Treasury Secretary Scott Bessent in Washington. Afterward, she announced that Switzerland was set to get “somewhat preferential treatment.”
At this point, the Swiss believed they were on firm ground with the US president, because of the small size of their economy and the fact that they abolished industrial tariffs.
Switzerland could give Trump a quick win, an adviser on the Swiss side said at the time. And with Bessent and others, the often-fickle president was surrounded by people who understood the country wasn’t problematic.
The Swiss plan included concessions on some agricultural products and easier approvals for US medical devices. They also pointed to billion-dollar investments national pharma giants Roche Holding AG and Novartis AG have pledged.
In return, they sought a 10% tariff and a pledge that Trump won’t put punitive levies on medicines in his national-security investigations.
In May and June, the office of US Trade Representative Jamieson Greer held more than 20 rounds of talks with the Swiss. Negotiations occurred frequently via video calls, sometimes even by WhatsApp.
Bessent was looped in, and on June 23, Keller-Sutter had a phone call with him and said they’re close to an agreement.
A few days later, there was a draft. It contained a clause that Swiss drug makers would no longer seek to source certain ingredients from China.
There’s different understandings of what happened next. Some people said that Bessent, Greer and Commerce Secretary Howard Lutnick signaled to Swiss negotiators that they’d support the accord in front of the president. Others said the US officials made clear to their Swiss counterparts they would simply brief the president on the positives and negatives of a potential deal but the final decision rested solely with Trump.
The idea that there was a completed deal that US Cabinet Secretaries pushed to Trump is inaccurate, one of the people said.
Swiss federal president Karin Keller-Sutter in Warsaw, Poland, on April 11, 2025. (AP Photo/Czarek Sokolowski, File) · ASSOCIATED PRESS
In Bern, Keller-Sutter and her fellow ministers still hadn’t heard directly from Trump. But they decided to rely on the word of his ministers and gave their formal approval on US Independence Day.
Keller-Sutter says that in late July Greer’s office told Swiss negotiators that it would be helpful if she asked for a phone call with the US president. She did so.
One person familiar with the matter said the Swiss decided on their own to call Trump.
The conversation that changed everything for the Swiss started at 2 p.m. Washington time on July 31.
After offering congratulations for Switzerland’s national holiday the following day, Trump hit Keller-Sutter with an accusation: her nation was stealing from the US, he said, pointing out a trade deficit he rounded up to $40 billion.
The Swiss were caught off guard as the bilateral balance hadn’t come up in previous talks. They were comfortable they’d defused the issue by noting that the deficit in goods was almost completely offset by imports of services. They also highlighted that the country was the seventh-largest foreign investor in the US.
On the phone, the Swiss president — a stoic politician not prone to dramatic gestures or punchy one-liners — took the stance that Switzerland stands by its word and the pre-negotiated draft accord. If there was disagreement, it was no deal over a bad deal.
Two different narratives of the call have emerged. One portrays Keller-Sutter lecturing Trump and botching the encounter. The other suggests it was all show and Trump had made up his mind to hit Switzerland before picking up the phone.
The truth might lie in the middle. Unlike some other leaders, Keller-Sutter is not one to opt for pomp and flattery, like NATO Secretary-General Mark Rutte has done to woo the US leader.
“We will not make promises we cannot keep,” Keller-Sutter told reporters when asked if she should have followed such a negotiating style.
But Trump also may have wanted to make an example of Switzerland after facing criticism for caving in on tariffs, especially against big countries like China.
Treasury Secretary Scott Bessent at the Capitol in Washington, Tuesday, June 24, 2025. (AP Photo/J. Scott Applewhite) · ASSOCIATED PRESS
“The woman was nice, but she didn’t want to listen,” Trump later told CNBC.
On Aug. 1, Keller-Sutter tried to show a brave face. Speaking on the Rütli meadow — a field overlooking Lake Lucerne where, according to legend, Switzerland’s founding fathers swore to protect each other from foreign powers — she said the nation can handle the crisis.
“Switzerland is used to storms,” Keller-Sutter told the crowd. “I don’t want to give this too much room today — this is our day, the day of the Swiss people.”
Given the shock, that was a big ask, and critics quickly descended on the president, blaming her for not joining other countries in throwing Trump a token to allow him to claim victory, or at least having a Plan B.
With just days before the start of tariffs on Thursday, the government focused on diplomacy rather than retaliation. Negotiators sought contact with US counterparts with an improved offer. Options ranged from extended investment pledges to purchases of US defense goods and liquefied natural gas.
On Tuesday, with two days to go, Keller-Sutter made a surprise trip to Washington. But it was a desperate attempt. As her plane took off from Dübendorf Air Base near Zurich, she had no invitation to meet Trump.
She returned empty handed after only a courtesy meeting with Secretary of State Marco Rubio, who doesn’t lead negotiations on trade deals. It was her only official encounter with the US administration.
One hour before her plane landed back in Switzerland, the tariff kicked in and the storm started to unfold.
Swiss companies initiated emergency plans to relocate production elsewhere to avoid the levies or pause deliveries to the US.
While the Swiss government is keeping a delegation in Washington to pursue concessions, the steadfast faith on the country’s exceptionalism is now broken.
“In negotiations, such breaks can happen,” Keller-Sutter told reporters. “One has to live with that and carry on.”
—With assistance from Jordan Fabian and Catherine Lucey.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.