Swiss hoping Trump will lower tariff rate

Switzerland has launched a last-ditch attempt to persuade United States President Donald Trump not to hit Swiss imports with a 39 percent tariff.

Guy Parmelin, who heads Switzerland's department of economic affairs and who is a vice-president of the European nation, said the 39 percent tariff rate announced on Friday could trigger a recession in his country.

Parmelin told Swiss broadcaster Radio Television Suisse, or RTS, the recession risk and the fact that industry associations are warning tens of thousands of jobs could be at risk prompted ministers to hold a special Cabinet meeting on Monday, to talk about their next steps ahead of the new tariff rate taking effect on Aug 7.

"We need to fully understand what happened, why the US president made this decision," RTS quoted Parmelin as saying. "Once we have that on the table, we can decide how to proceed."

The US is Switzerland's largest export market, with pharmaceuticals, watches, and machinery its biggest export industries.

Parmelin said "the timeline is tight" and conceded "it may be hard to achieve something by the 7th" but said his country will "do everything we can to show goodwill and revise our offer".

He said it looks as though the US may have singled Switzerland out for a particularly high tariff rate because of its significant trade deficit with the US, which stood at $48 billion last year. But he said the deficit could be mitigated in future by Switzerland buying US liquefied natural gas, or LNG, which some other European nations have recently agreed to do as part of trade deals with the US.

"Look at the European Union, they promised to buy LNG," he said.

"Switzerland imports LNG too, maybe that's one path."

He said the country could also consider making major investments in the US economy in order to persuade Trump to lower the tariff rate, adding that "to be sure, it's a strong enough basis for continuing talks".

He said he and Switzerland's President Karin Keller-Sutter are standing by to travel to Washington if additional talks are scheduled.

Hans Gersbach, an economist at ETH Zurich, a public university in Zurich, Switzerland told the Reuters news agency Swiss economic output could be reduced by 0.3 percent to 0.6 percent if the 39 percent US tariff remains in place. And he said that could rise to 0.7 percent if pharmaceuticals, which are not covered by the current tariff rate, are added to the mix.

Gersbach added that a prolonged disruption could shrink Switzerland's GDP by 1 percent.

The financial holding company Nomura Holdings said Switzerland's central bank, Swiss National Bank, could respond by cutting interest rates in September, likely by 25 basis points, which would take the central interest rate to -0.25 percent.

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