US tariffs hit the start-up ecosystem

The US has introduced a basic customs duty of 10% on all imports to the US from 5 April. In addition, import duties of up to 49% will be imposed on selected countries from 9 April.

The new country-specific tariffs will also directly affect Swiss exports to the US. They will be subject to an excessively high rate of 31%, which will be enacted on 9 April. Pharmaceutical products are exempt. For the Swiss export industry, this new tariff will be a serious burden. The country-specific tariff on Swiss exports is much higher than that on EU exports (20%).

Market entry and growth hampered

The US is Switzerland's most important export market, with around CHF 53 billion (excluding gold), ahead of Germany. US countermeasures directly affect US exports of many Swiss sectors, including startups. The tariffs are likely to have a particularly negative impact on medical technology companies and deep-tech companies. For Swiss medical technology startups, the US has usually been the first market to launch an innovation. This route to market entry is now more difficult. The US market is also often the preferred market for the scale-up phase for deep tech start-ups. Numerous companies, for example drone and robot manufacturers, have subsidiaries there or have built up a dense distribution network. At the same time, production cannot be relocated to the US because it requires skilled workers who have undergone a vocational training system that does not exist in the US.

Unequal treatment compared to the EU

While Swiss products are subject to tariffs of 32%, the US only charges 20% for exports from EU countries. If this unequal treatment persists over the longer term, it will make Switzerland less attractive as a production location. There is a risk that startups will relocate their production to EU countries or set up in the EU instead of Switzerland.

Exits affected

In addition to the effects on exports, exits are also affected. US companies are responsible for around half of the exits of Swiss VC-backed companies. However, acquiring a Swiss start-up becomes less attractive if its products are subject to high tariffs when exported to the US.

Moreover, there are risks from indirect effects. If inflation flares up again in the US and the expected interest rate cuts fail to materialise, this will have a negative impact on VC investments.

There are no comprehensible reasons for the particularly high tariffs on products from Switzerland. In a press release, the trade association economiesuisse emphasised: ‘For years, Switzerland has pursued an open trade policy and will have unilaterally abolished its industrial tariffs as of 1 January 2024. Overall, Switzerland's import tariffs are already well below those of the US. If services are included alongside goods, trade between Switzerland and the US is almost balanced.’

Industry associations such as Swiss Medtech are now calling for three measures: trade policy talks with Washington, the proactive removal of technical barriers to trade and the further expansion of international agreements with other countries in particular the European Union and regulatory adjustments to ease exports.

More information and tips

Switzerland Global Enterprise has published a summary of the most important changes regarding the tariffs in German and French. SGE will be also hosting a webinar about the tariff situation. 

Seco published an overview of the measures and important background information. 

The full text of the Executive Order can be found on the website of The White House. 

(Stefan Kyora)