US tariffs are a significant risk for the Swiss economy as its exposure to the US market is big, amounting to 4% of GDP. Therefore, the impact of tariffs will be much bigger than for the European Union, where direct exposure to the US amounts to 1.9% of GDP.
The average effective tariff rate for exports from Switzerland to the US has surged from 0.6% in December 2024 to 25.3%, a 24.7 percentage point increase. Based on the methodology described here, we estimate a cumulative direct impact of the increase of US tariffs on Swiss GDP of about 0.86% in the first two years, also taking into account recent Swiss franc appreciation. If we take out the impact of the Swiss franc appreciation, the impact would be 0.75% of GDP over the next two years. Longer-term projections suggest a 2.3% GDP hit, underscoring the persistent drag on growth.
But the reality could be even worse if the pharmaceutical sector were hit with higher customs duties. The chemical and pharmaceutical sector, which accounts for 7-8% of Swiss GDP, has been the main driver of export growth in recent decades. With 60% of Swiss pharma exports destined for the US, the sector is disproportionately exposed to American trade policy shifts. In a worst-case scenario, where 100% tariffs were applied to pharma products, the effective tariff rate for Switzerland would climb to 47%. This would mean an increase of 46.7 percentage points! According to our estimates, this would hit Swiss GDP by 1.7% in the first two years and a 4.13% decline over the longer term. Such a shock could tip Switzerland into recession territory.