Ten take-aways
The US is Switzerland’s most important export market for goods (US$52bn in 2023) and services (US$30bn in 2023).
Switzerland’s bilateral trade balance with the US is in a surplus for goods (US$25bn in 2023) and in a deficit for services (US$20bn in 2023).
Swiss exports to the US are concentrated in selected high-tech industries and a few destination US states.
The market share of selected Swiss export goods indicates strong competitiveness and limited scope for import substitution.
Compared with other major trading partners, Swiss exports compete less directly with US exports in third markets.
The US is Switzerland’s largest foreign direct investment (FDI) destination (US$350bn in 2023).
The majority of Swiss FDI in the US (60%) is in the manufacturing industry, while most US FDI in Switzerland (65%) is in non-manufacturing.
Swiss-owned multinational enterprises employ almost 400,000 people in the US, export goods worth almost US$19bn per year and spend around US$15bn per year on research and development.
The Swiss franc is strong and stable and currently doesn’t seem to present a concern to the US.
The introduction of tariffs is likely to hurt both Switzerland and the US directly and indirectly.
Background and context
2024’s politics shaped 2025’s economics
The year 2024 was a ‘super year’ for elections – some 3.7 billion people (around half of the world’s population) went to the polls in 72 countries.1 Among those countries were geoeconomic heavyweights such as India (April/May), Mexico (May), the European Union (EU, June), the United Kingdom (July), Japan (October) and the United States of America (US, November). In most elections, incumbents faced a difficult time as they either sustained a loss in political power or got voted out of office altogether.2
Political uncertainty in 2024 continues in 2025
While the votes are in, political uncertainty remains. In fact, political uncertainty is likely to shape the geoeconomic landscape of the year 2025. Ranked in second place in the KOF Globalisation Index3 and with an international trade openness score of 1384, defined as imports and exports as a percentage of gross domestic product (GDP), Switzerland’s economic success relies to a significant extent on global markets. The US represents the largest export market for Switzerland – worth around US$52bn.5 Therefore, political uncertainty – or more precisely, policy uncertainty – in the US may present a veritable concern to Swiss exporters in 2025.
Tariffs are back in town
And indeed, there’s a level of uncertainty, particularly when it comes to international trade policy. Donald J. Trump, who’ll be inaugurated as the 47th US president on 20 January 2025, proposed a 60% tariff on imports from China, a 25% tariff on imports from Canada and Mexico6 and a 20% universal tariff on imports from all other countries (including the EU and Switzerland)7. In such a scenario, it’s estimated that Swiss real GDP would fall by more than 0.2% per year and cost every Swiss citizen at least CHF 200 per year.8
Understand the knowns to prepare for the unknowns
There are many factors that may influence such scenarios. How will trading partners retaliate? How will the US dollar and other currencies respond? How will inflation rates react? This is just a selection of the known unknowns. Rather than exploring these unknowns, however, this brief note aims to take stock of the knowns. More specifically, this note presents a snapshot of the economic relationship between Switzerland and the US at the start of 2025.
Trade
Finding the balance between goods and services
One central topic in the current trade policy debate is the trade balance,9 defined as the difference in value between a country’s imports and exports. Switzerland’s trade in goods surplus started rising gradually in 2013 and peaked in 2020. The current goods trade surplus with the US is estimated at around US$25bn (Figure 1). For reference, China’s trade in goods surplus with the US is estimated to be at around US$279bn and the EU’s surplus with the US is around US$202bn. The US trade in goods deficit with Canada is around US$72bn and the US trade deficit with Mexico is US$161bn.10 The picture is different when it comes to trade in services. Switzerland has a trade in services deficit with the US worth US$20bn (Figure 1). Again, for reference, the US has a services trade surplus with China of US$27bn and with the EU of US$77bn. The trade in services surplus with Canada is estimated to be at around US$32bn. Mexico has a relatively small surplus in trade in services with the US of around US$700m.11
Figure 1: Switzerland – US trade balance in goods and services, 2000–2023
Source: Authors’ calculation and illustration based on the U.S. Bureau of Economic Analysis (2024).12
Putting trade balances into perspective
The joint consideration of trade balances for goods and services provides a more differentiated view on the trade relationship between the US and its partners. Indeed, taking both goods and services into account, Switzerland’s trade surplus is estimated at ‘only’ US$5bn. What’s more, it’s useful to put the trade balance into perspective with economic size (Figure 2). With regard to trade in services, Switzerland’s deficit (2% of Switzerland’s GDP) comparison with Singapore (deficit worth 5% of Singapore’s GDP) and Ireland (deficit worth 11% of Ireland’s GDP) stands out. All three countries are known as global hubs for finance, technology and multinational enterprises (MNEs), and the related demand for US intellectual property as well as financial and professional services. Switzerland’s trade in services deficit with the US is particularly notable since, in comparison to the US, Switzerland’s services industry is on average slightly more restricted (Annex, Figure A1 and Figure A2). One notable exception is the insurance, reinsurance and pension funding services industry which is more protected in the US than in Switzerland.
While trade in services plays an important role for the Swiss and US economies, the bilateral trade in goods balance continues to dominate the public debate. So, which goods does Switzerland actually export to the US and where do these exports go specifically?
Figure 2: US trade in goods and services balance with selected trading partners, 2023
Source: Authors’ calculation and illustration based on the U.S. Bureau of Economic Analysis (2024) and World Bank (2024).13
Pharma and precision instruments drive Swiss exports to the US
An analysis of the ten most important Swiss import industries in the US indicates that pharmaceuticals and medicines account for one-third of imports, followed by navigational, medical and control instruments (17%), and non-ferrous metal (except aluminium) production and processing (15%).14 In other words, the three most important import industries account for two-thirds of total US imports from Switzerland. The top ten industries account for more than 90% of imports.15 (Figure 3)
Figure 3: Imports from Switzerland by product code (four-digit Harmonised System level), 2023
Source: Authors’ calculation and illustration based on the United Nations (2024).16 The figure only shows products which account for more than 0.5% of total exports.
Pharmaceuticals may be high up on the incoming US administration’s political agenda
The pharmaceutical industry is not only important for Swiss exporters but also appears to be of particular political importance for the incoming US administration. In his previous term as well as more recently, Donald J. Trump stated that he aims to lower drug prices in the US.17 At the same time, he seeks to bring pharmaceutical manufacturing back to the US. In 2020, for instance, he issued an executive order on ‘Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States’.18 The US remains a net importer of pharmaceutical products, however, and the trade deficit in this sector has actually been increasing over the past decade (Figure 4).
Figure 4: Pharmaceutical (HS chapter 30) imports to and exports from the US, 2014–2023
Source: Authors’ calculation and illustration based on the United Nations (2024).19
US shareholders have significant interests in Swiss companies
A large proportion of these pharmaceutical imports come from Ireland (20%), Germany (11%) and Switzerland (8%) (Figure 5). The introduction of a universal tariff on these imports is therefore expected to drive up prices and potentially even affect the availability of pharmaceutical drugs in the US20 – a stark contrast with the objective of reducing pharmaceutical drug prices. This is likely to impact not only Swiss exporters but also their shareholders in the US. For example, Swiss pharmaceutical company Novartis had net sales worth around US$18bn in the US in 2023, accounting for 40% of global net sales. Almost 25% of Novartis’ registered shares are held by shareholders in the US.21
Figure 5: Pharmaceutical (HS chapter 30) imports to and exports from the US, 2023
Source: Authors’ calculation and illustration based on the United Nations (2024).22
High market shares indicate limited substitutability
An analysis at the detailed product level indicates that there are also other Swiss export products with a remarkable market share in the US – measured both in terms of value and weight (Figure 3 and Annex, Figure A3 and Table A4).23 Complete and assembled watch movements from Switzerland, for example, account for around 90% of these imports in 2023. At this level of aggregation, around 20 Swiss export products account for more than 10% of US imports. These market shares not only suggest a strong competitiveness but also indicate that these products can’t be easily substituted by domestically manufactured products and/or by products imported from other parts of the world.
Swiss exports compete comparatively little with US exports
Interestingly, however, Swiss exports don’t compete directly with US exports in third markets as much as the US’ other major trading partners do. An analysis of the Export Similarity Index (ESI) and the Market Overlap Index (MOI) of Switzerland and the US indicates that the two countries export different products to different markets – in comparison with the US’ other major trading partners (Annex, Figure A5).
Half of Swiss exports go to two US states
Swiss exports to the US are relatively concentrated in terms of US destination states. Around one-quarter of imports are destined for New York, followed by Indiana (16%), Pennsylvania (9%), New Jersey (7%) and California (6%). On the other hand, 17 US states account for more than 90% of imports.24 (Figure 6)
Interestingly, Swiss imports to the US are almost equally split between US states in which the Republican Party (52% of total Swiss imports) and the Democratic Party (48% of total Swiss imports) won in the 2024 presidential election.
Figure 6: Imports from Switzerland by industry and US destination state, 2023
Source: Authors’ calculation and illustration based on the International Trade Administration (2024).25 The illustration excludes exports that account for less than 1.5% of total Swiss exports to the US. The colours on the right-hand axis indicate whether the Republican Party (red) or the Democratic Party (yellow) won the 2024 US presidential election in that US state.
Investment
Tariffs have limited success in attracting investment
A second important indicator of the bilateral economic relationship between Switzerland and the US is foreign direct investment (FDI). Depending on the specific scenario, imports and FDI inflows may act as complements or substitutes. In the (simplistic) complement scenario, one example could be that a Swiss company builds a factory in the US (inward FDI rises) and imports required intermediate goods (imports rise) to manufacture the final goods. In the (simplistic) substitute scenario, one example could be that tariffs increase the cost of imports. Rather than importing goods (imports fall), a Swiss company decides to build a factory in the US to produce the goods (inward FDI rises). There are many factors that may impact the relationship between imports and FDI. One recent analysis of the first Trump administration (2017–2021) finds that tariffs generally have mixed success in attracting FDI.26
The stock of Swiss FDI in the US has been increasing
The inward and outward FDI positions (also referred to as FDI stocks) of Switzerland and the US illustrate the bilateral investment relationship (Figure 7).27 The inward FDI position from the US to Switzerland more than doubled between 2014 and 2017, remained relatively constant until 2020, and then started to decrease. While it’s difficult to pinpoint the driving factors behind this development, it’s likely that tax policy changes in the US28 as well as in Switzerland29 played a role. Switzerland’s FDI positions in the US have been on a gradually upward trend for the past ten years.
Figure 7: Switzerland – US FDI positions, 2014–2022
Source: Authors’ calculation and illustration based on the Organisation for Economic Co-operation and Development (2024).30
Swiss FDI in the US mirrors exports
Around 60% of Swiss FDI positions in the US are in the manufacturing industry and 40% are in the non-manufacturing industry. Within manufacturing, chemicals is the most prominent sector – accounting for around 35% of Swiss FDI positions in the US. A considerable share of Swiss FDI positions in the US, both in manufacturing and in non-manufacturing, are non-disclosed to avoid the disclosure of data of individual companies. In the manufacturing industry, these non-disclosed positions fall into food manufacturing and other manufacturing industries. In the non-manufacturing industries, non-disclosed FDI positions are distributed across wholesale trade, retail trade, information, depository institutions and finance. (Figure 8)
Figure 8: Switzerland – US FDI positions by industry, 2023
Source: Authors’ calculation and illustration based on the U.S. Bureau of Economic Analysis (2024).31
The majority of US FDI in Switzerland goes to non-manufacturing industries
US FDI positions in Switzerland follow a somewhat different pattern. The majority, around 65%, of US FDI positions in Switzerland are in the non-manufacturing industries – largely driven by non-bank holding companies, wholesale trade and non-disclosed FDI positions in other industries. US manufacturing FDI positions in Switzerland are largely concentrated in chemicals – accounting for a total of 19% of FDI positions.
Employment
Swiss MNEs contribute to employment, trade and R&D in the US
The close bilateral trade and investment relationship between Switzerland and the US also leaves a sizeable mark on employment. Affiliates of Swiss majority-owned MNEs employ almost 400,000 people in the US. Every year, these MNEs import goods worth almost US$28bn to the US and export goods worth almost US$19bn from the US. Swiss MNEs invest heavily in research and development (R&D) – around US$15bn per year. With 12%, California has the largest employment of Swiss MNEs, followed by New Jersey (9%) and New York (8%). 51% of Swiss MNE employees are employed in US states where the Democratic Party won in the 2024 US presidential election and 49% are in US states where the Republican Party won. (Figure 9)
Figure 9: Employment of US affiliates majority-owned by Swiss MNEs, 2022
Source: Authors’ calculation and illustration based on the U.S. Bureau of Economic Analysis (2024).32
US MNEs create employment in Swiss manufacturing and non-manufacturing industries
Affiliates majority-owned by US MNEs employ around 95,000 people in Switzerland. In the manufacturing sector, most people are employed in the chemicals industry (9%) and in the computers and electronics industry (8%). The largest driver of employment is the wholesale trade sector (19%) and the professional, scientific and technical services industry (11%) as well as the information sector (9%). (Figure 10)
Figure 10: Employment of Swiss affiliates majority-owned by US MNEs, 2022
Source: Authors’ calculation and illustration based on the U.S. Bureau of Economic Analysis (2024).33
Currency
The Swiss franc is strong and stable
The bilateral economic relationship between Switzerland and the US – whether it’s in terms of trade, investment or employment – is greatly influenced by the exchange rate of the two countries’ currencies (Figure 11). The Swiss franc is known for its strength and stability – that said, the Swiss National Bank recently reiterated that it “[…] stand[s] ready to be active on foreign-exchange markets if needed”34 and is addressing the Swiss franc’s appreciation amid economic policy uncertainty.
Figure 11: Real Effective Exchange Rate, Consumer Price Index, 2000–2023, quarterly
Source: Authors’ calculation and illustration based on the International Monetary Fund (2024).35
The incoming US administration is likely to focus on other currencies
Overall, however, it’s relatively unlikely that the Swiss franc will be a primary concern for the incoming US administration. Switzerland is, for instance, not mentioned on the US Department of the Treasury’s latest Monitoring List which comprises China, Japan, Korea, Taiwan, Singapore, Vietnam and Germany. The US Treasury highlights China’s failure to publish foreign exchange intervention and a broader lack of transparency around key features of its exchange rate policy. Japan, Korea, Taiwan, Vietnam and Germany meet the US Treasury’s criteria for having a significant bilateral trade surplus with the US and a material current account surplus. Singapore meets the criteria for engaging in persistent, one-sided foreign exchange intervention and having a material current account surplus.36
Summary and outlook
The year 2024 was politically eventful for many parts of the world. The new political realities are likely to cause policy uncertainty in 2025, especially in the field of international trade. As the largest destination for exports and investment, the US is of particular importance to Switzerland. This brief note illustrates that the bilateral economic relationship is built on solid foundations around trade, investment and employment.
While there can be no certainty, at this point Switzerland is unlikely to be the primary target of the incoming US administration’s international trade policy measures. The US-Switzerland trade in goods deficit is small compared to other major trading partners and almost eliminated when taking into account the bilateral trade in services surplus. The Swiss franc is strong and stable and currently appears to be of little concern to the US Treasury. Most imported goods from Switzerland are high-tech and many can’t be easily substituted by imports from other countries and/or domestically produced goods. At the same time, Swiss exports compete less directly with US exports in third markets than other major trading partners do.
Does that mean Switzerland is off the hook? Unfortunately, no. While Switzerland may not be the primary target of tariffs, it will still be affected heavily simply because the US is the most important export market. A universal tariff of 20%, as announced by the incoming US administration, is likely to have major effects on certain industries as well as the economy as a whole.
At PwC, we’re ready to navigate our clients through this time of uncertainty and complexity. In particular, we can put teams together to support our clients with regard to customs, supply chain and operations, transfer pricing and value chain transformation, and pharma regulatory affairs. Get in touch with us.
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Annex
Figure A1: Switzerland and US Services Trade Restrictiveness Index, all services, 2023
Source: Authors’ calculation and illustration based on the Organisation for Economic Co-operation and Development (2024).37 The Services Trade Restrictiveness Index takes values between zero and one, with one being the most restrictive.
Figure A2: Switzerland and US Services Trade Restrictiveness Index, financial and professional services, 2014–2023
Source: Authors’ calculation and illustration based on the Organisation for Economic Co-operation and Development (2024).38 The Services Trade Restrictiveness Index takes values between zero and one, with one being the most restrictive.
Figure A3: Market share of Swiss imports in the US (HS four-digit level), 2023
Source: Authors’ calculation and illustration based on the United Nations (2024).39
Table A4: Swiss imports in the US (HS four-digit level) with a market share above 10%, 2023
Product code |
Product name |
9108 |
Watch movements, complete and assembled |
9111 |
Watch cases and parts thereof |
9110 |
Watch or clock movements, complete, unassembled or partly assembled (movement sets); incomplete watch or clock movements, assembled; rough watch or clock movements |
9113 |
Watch straps, watch bands, watch bracelets and parts thereof |
5002 |
Raw silk (not thrown) |
2924 |
Carboxyamide-function compounds; amide-function compounds of carbonic acid |
9114 |
Clock or watch parts; not elsewhere classified in chapter 91 |
2928 |
Organic derivatives of hydrazine or of hydroxylamine |
| 9016 | Balances; of a sensitivity of 5 cg or better, with or without weights |
8460 |
Machine-tools; for deburring, sharpening, grinding, honing, lapping, polishing or otherwise finishing metal, sintered metal carbides or cermets by means of grinding stones, abrasives or polishing products |
9109 |
Clock movements, complete and assembled |
7115 |
Articles of precious metal or of metal clad with precious metal |
8440 |
Book-binding machinery; including book-sewing machines |
8442 |
Machinery, apparatus and equipment (excluding machines of headings 8456 to 8465) for preparing or making printing components; plates, cylinders and other printing components; lithographic stones prepared for printing purposes |
2837 |
Cyanides, cyanide oxides and complex cyanides |
8202 |
Tools, hand; saws and blades for saws of all kinds (including slitting, slotting or toothless blades) |
9301 |
Military weapons; other than revolvers, pistols and arms of heading number 9307 |
9021 |
Orthopaedic appliances; including crutches, surgical belts and trusses; splints and other fracture appliances; artificial parts of the body; hearing aids and other which are worn, carried or implanted in the body to compensate for a defect or disability |
Figure A5: Export Similarity Index (ESI) and Market Overlap Index (MOI), 2023
Source: Authors’ calculation and illustration based on the United Nations (2024).40 The Export Similarity Index (ESI) quantifies two countries’ export profiles by comparing the share of each product category in their total exports. The Market Overlap Index (MOI) measures the extent to which two exporters compete in the same markets by analysing the similarity of their export shares across destination countries. For both measures, bilateral exports are excluded to focus solely on competitiveness in third-party markets, avoiding bias from direct trade relationships.
Endnotes
[1] United Nations (2024). A ‘super year’ for elections. Available here. Accessed on 16 December 2024.
[2] Pew Research Center (2024). Global Elections in 2024: What We Learned in a Year of Political Disruption. Available here. Accessed on 16 December 2024.
[3] KOF Swiss Economic Institute (2024). KOF Globalisation Index. Available here. Accessed on 16 December 2024.
[4] World Bank (2024). Trade (% of GDP), World Development Indicators. Available here. Accessed on 16 December 2024.
[5] United Nations (2024). UN Comtrade Database. Available here. Accessed on 16 December 2024.
[6] CNN (2024). Trump ups the ante on tariffs, vowing massive taxes on goods from Mexico, Canada and China on Day 1. Available here. Accessed on 16 December 2024.
[7] Politico (2024). EU warned to prepare for early Trump tariff action. Available here. Accessed on 16 December 2024.
[8] KOF Swiss Economic Institute (2024). Trump’s trade tariffs would cost every Swiss citizen at least CHF200 per year. Available here. Accessed on 16 December 2024.
[9] Financial Times (2024). Trump’s tariff obsession is worse than before. Available here. Accessed on 16 December 2024.
[10] U.S. Bureau of Economic Analysis (2024). U.S. International Trade in Goods and Services, October 2024. Available here. Accessed on 16 December 2024.
[11] U.S. Bureau of Economic Analysis (2024). U.S. International Trade in Goods and Services, October 2024. Available here. Accessed on 16 December 2024.
[12] U.S. Bureau of Economic Analysis (2024). U.S. International Trade in Goods and Services, October 2024. Available here. Accessed on 16 December 2024.
[13] U.S. Bureau of Economic Analysis (2024). U.S. International Trade in Goods and Services, October 2024. Available here. Accessed on 16 December 2024.
World Bank (2024). GDP (current US$), World Development Indicators. Available here. Accessed on 16 December 2024.
[14] Grouped by the four-digit North American Industry Classification System (NAICS).
[15] International Trade Administration (2024). U.S. State Goods Trade by Partner. Available here. Accessed on 16 December 2024.
[16] United Nations (2024). United Nations Comtrade Database. Available here. Accessed on 16 December 2024.
[17] Forbes (2024). Pharmaceuticals have mostly been spared from past tariff battles, but this time they’re on the block. Available here. Accessed on 9 January 2025.
[18] White House (2020). Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States. Available here. Accessed on 10 January 2025.
[19] United Nations (2024). United Nations Comtrade Database. Available here. Accessed on 16 December 2024.
[20] The Hill (2024). How Trump’s tariffs could impact the pharmaceutical market. Available here. Accessed on 9 January 2024.
[21] Novartis (2024). Annual Report 2023. Available here. Accessed on 10 January 2025.
[22] United Nations (2024). United Nations Comtrade Database. Available here. Accessed on 16 December 2024.
[23] Grouped by the four-digit Harmonised System (HS).
[24] International Trade Administration (2024). U.S. State Goods Trade by Partner. Available here. Accessed on 16 December 2024.
[25] International Trade Administration (2024). U.S. State Goods Trade by Partner. Available here. Accessed on 16 December 2024.
[26] Global Trade Alert (2024). Make It Here in the USA! What the track record of attracting FDI into the United States implies for the Next Administration. Available here. Accessed on 17 December 2024.
[27] It’s important to note that outward FDI from Switzerland to US (or vice versa) doesn’t have to equal inward FDI to the US from Switzerland (or vice versa) due to differences in data collection methods, timing, intermediaries, reinvested earnings and reporting standards. For more information, see here.
[28] Tax Foundation (2022). Trends in FDI Before and After the Tax Cuts and Jobs Act. Available here. Accessed on 27 December 2024.
[29] Tax Foundation (2019). Switzerland Referendum Approves Tax Reform. Available here. Accessed on 27 December 2024.
[30] Organisation for Economic Co-operation and Development (2024). FDI by counterpart area and by economic activity. Available here. Accessed on 22 December 2024.
[31] U.S. Bureau of Economic Analysis (2024). Direct Investment by Country and Industry 2023. Available here. Accessed on 17 December 2024.
[32] U.S. Bureau of Economic Analysis (2024). Activities of U.S. Affiliates of Foreign Multinational Enterprises (MNEs). Available here. Accessed on 18 December 2024.
[33] U.S. Bureau of Economic Analysis (2024). Activities of U.S. Multinational Enterprises (MNEs). Available here. Accessed on 18 December 2024.
[34] Swissinfo (2024). SNB Ready to Fight Franc Jump From Trump Election, Schlegel Says. Available here. Accessed on 27 December 2024.
[35] International Monetary Fund (2024). Real Effective Exchange Rate, Consumer Price Index. Available here. Accessed on 21 December 2024.
[36] U.S. Department of the Treasury (2024). Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. Available here. Accessed on 27 December 2024.
[37] Organisation for Economic Co-operation and Development (2024). Services Trade Restrictiveness Index. Available here. Accessed on 22 December 2024.
[38] Organisation for Economic Co-operation and Development (2024). Services Trade Restrictiveness Index. Available here. Accessed on 22 December 2024.
[39] United Nations (2024). United Nations Comtrade Database. Available here. Accessed on 16 December 2024.
[40] United Nations (2024). United Nations Comtrade Database. Available here. Accessed on 29 December 2024.