Switzerland is a small, highly interconnected country. On the one hand, we procure key goods and services from abroad, for instance foodstuffs, energy, active pharmaceutical ingredients or computer chips. On the other hand, we earn a large share of our income with exports such as precision instruments, machines, watches, drugs and financial services.
Switzerland improves economic prosperity in many countries with the international trade of goods and services – including in the US. This is reflected in higher incomes, for instance. Without trading with Switzerland, many countries in Europe, America and Asia would be a bit poorer.
However, although the US also benefits from trading with Switzerland, Switzerland remains vulnerable in a trade war with Washington, as we have seen in 202…
Switzerland is a small, highly interconnected country. On the one hand, we procure key goods and services from abroad, for instance foodstuffs, energy, active pharmaceutical ingredients or computer chips. On the other hand, we earn a large share of our income with exports such as precision instruments, machines, watches, drugs and financial services.
Switzerland improves economic prosperity in many countries with the international trade of goods and services – including in the US. This is reflected in higher incomes, for instance. Without trading with Switzerland, many countries in Europe, America and Asia would be a bit poorer.
However, although the US also benefits from trading with Switzerland, Switzerland remains vulnerable in a trade war with Washington, as we have seen in 2025. There are several reasons for this: first, for a huge country like the US, foreign trade is less significant as a share of the overall economy compared to Switzerland. This means that the US economy is less dependent on exports.
What is more, around 18 percent of our goods exports went to the US in 2024. However, this corresponds to merely two percent of overall goods imports into the US. This makes Switzerland a very minor partner for Washington, whereas the US is a key market for us. Finally, Switzerland benefits more from trade with the US than it contributes to economic prosperity in the US.
This triple imbalance makes Switzerland vulnerable: each trade disruption hits us far harder than the US. If tariffs rise, we have a lot more to lose – not only in absolute terms, but even more so relative to our national income. This fact also becomes clear in political negotiations: A trade deal requires Switzerland to make concessions.
Switzerland’s vulnerability is amplified by the fact that the US government strategically focuses solely on goods trade and ignores services and direct investment. Although Switzerland has a trade surplus in goods trade with the United States, the opposite is the case for services such as software or cloud services.
However, this vulnerability is not unique to Switzerland. Other export-driven countries, such as Japan and South Korea, have similar problems. They have also been forced to make broad concessions and promise additional investments in the US.
But what can the small country of Switzerland do in 2026 to become more resilient in its trade policy? From an economic perspective, I see six strategic directions: First, we need a clearer idea of our economic dependencies – from trade flows and technological interdependencies to the international financial markets. Not only in relation to the US, but also with respect to China. Transparency forms the basis of any smart strategy. The KOF Institute can offer key foundations here for decision-makers.
Second, stabilising economic and trade relations with the US remains key to our prosperity. The proposed deal with a tariff of 15 percent instead of 39 percent for the industries concerned is the best route from an economic perspective to significantly reduce the economic loss, even if clear risks and strains remain. After all, these risks and strains also exist for other trade options.
Third, renewing the free trade agreement with China, including access to critical supplies, could help stabilise the supply chains with a key trade partner. However, the EU also remains key for Switzerland economically. Regardless of the institutional issues, it is clear from an economic perspective that the EU domestic market must remain accessible to Switzerland. Otherwise, new vulnerabilities will arise.
Furthermore, Switzerland should broaden its trade relations, both for imports and exports, to reduce fragile dependencies. In doing so, it will be crucial to strengthen trade with countries that are also vulnerable despite high economic output. They have less leverage over us and are stable partners for an open economy such as Switzerland. India and Canada are good examples, as are many states in Latin America and Asia.
Fifth, Switzerland should increasingly drive trade agreements between a limited number of interested states, since the classic multilateralism of the World Trade Organisation (WTO) has been largely blocked by diverging preferences. Switzerland’s agreement with the South American Mercosur states is a good example.
And, sixth, Switzerland should position itself even more strongly as a technology hub. In some regions, such as the Greater Zurich Area, this is already happening. For example, cutting-edge research and knowledge transfer in the field of artificial intelligence and robotics could lead to a productivity boost for the entire Swiss economy in the medium term, making us less vulnerable to economic threats and supply chain risks. Switzerland’s flexible innovation system with strong basic research will be essential to achieve this.Switzerland improves economic prosperity in many countries with the international trade of goods and services – including in the US. This is reflected in higher incomes, for instance. Without trading with Switzerland, many countries in Europe, America and Asia would be a bit poorer.
However, although the US also benefits from trading with Switzerland, Switzerland remains vulnerable in a trade war with Washington, as we have seen in 2025. There are several reasons for this: first, for a huge country like the US, foreign trade is less significant as a share of the overall economy compared to Switzerland. This means that the US economy is less dependent on exports.
What is more, around 18 percent of our goods exports went to the US in 2024. However, this corresponds to merely two percent of overall goods imports into the US. This makes Switzerland a very minor partner for Washington, whereas the US is a key market for us. Finally, Switzerland benefits more from trade with the US than it contributes to economic prosperity in the US.
This triple imbalance makes Switzerland vulnerable: each trade disruption hits us far harder than the US. If tariffs rise, we have a lot more to lose – not only in absolute terms, but even more so relative to our national income. This fact also becomes clear in political negotiations: A trade deal requires Switzerland to make concessions.
Switzerland’s vulnerability is amplified by the fact that the US government strategically focuses solely on goods trade and ignores services and direct investment. Although Switzerland has a trade surplus in goods trade with the United States, the opposite is the case for services such as software or cloud services.
However, this vulnerability is not unique to Switzerland. Other export-driven countries, such as Japan and South Korea, have similar problems. They have also been forced to make broad concessions and promise additional investments in the US.
But what can the small country of Switzerland do in 2026 to become more resilient in its trade policy? From an economic perspective, I see six strategic directions: First, we need a clearer idea of our economic dependencies – from trade flows and technological interdependencies to the international financial markets. Not only in relation to the US, but also with respect to China. Transparency forms the basis of any smart strategy. The KOF Institute can offer key foundations here for decision-makers.
Second, stabilising economic and trade relations with the US remains key to our prosperity. The proposed deal with a tariff of 15 percent instead of 39 percent for the industries concerned is the best route from an economic perspective to significantly reduce the economic loss, even if clear risks and strains remain. After all, these risks and strains also exist for other trade options.
Third, renewing the free trade agreement with China, including access to critical supplies, could help stabilise the supply chains with a key trade partner. However, the EU also remains key for Switzerland economically. Regardless of the institutional issues, it is clear from an economic perspective that the EU domestic market must remain accessible to Switzerland. Otherwise, new vulnerabilities will arise.
Furthermore, Switzerland should broaden its trade relations, both for imports and exports, to reduce fragile dependencies. In doing so, it will be crucial to strengthen trade with countries that are also vulnerable despite high economic output. They have less leverage over us and are stable partners for an open economy such as Switzerland. India and Canada are good examples, as are many states in Latin America and Asia.
Fifth, Switzerland should increasingly drive trade agreements between a limited number of interested states, since the classic multilateralism of the World Trade Organisation (WTO) has been largely blocked by diverging preferences. Switzerland’s agreement with the South American Mercosur states is a good example.
And, sixth, Switzerland should position itself even more strongly as a technology hub. In some regions, such as the Greater Zurich Area, this is already happening. For example, cutting-edge research and knowledge transfer in the field of artificial intelligence and robotics could lead to a productivity boost for the entire Swiss economy in the medium term, making us less vulnerable to economic threats and supply chain risks. Switzerland’s flexible innovation system with strong basic research will be essential to achieve this.