President of Switzerland, Karin Keller-Sutter. Yonhap News. 

The Swiss government announced on the 7th (local time) that it will continue negotiations to lower the U.S.'s 39% reciprocal tariff, which took effect.

President and Finance Minister Karin Keller-Sutter stated at a press conference held that afternoon, "We must anticipate difficult times for Switzerland, its businesses, and its workers. It is difficult to say at this point how long this situation will last."

She added that the Federal Department of Economic Affairs' trade negotiation team remains in the United States and that retaliatory tariffs, which could cause additional costs such as increased import prices, are not planned.

Regarding the hardline stance of some politicians who argue that the contract to purchase U.S.-made F-35A fighter jets should be canceled and used as leverage, she drew a line, stating, "The Federal Council (the collegial body of ministers) has repeatedly reaffirmed its position on the F-35."

When asked about countermeasures if the 39% tariff were to be prolonged, President Keller-Sutter said, "If we invest heavily and are then penalized with high tariffs, we must ask ourselves if it's worth it. We will strive for a rules-based relationship, but not at any cost."

President Keller-Sutter traveled to the United States the previous day to attempt last-minute negotiations but returned home after meeting only with Secretary of State Marco Rubio. She spoke with U.S. President Donald Trump on the 31st of last month, but two hours later, she was hit with the 39% tariff bomb, leading to harsh criticism.

The negotiation teams of both governments prepared a draft trade agreement early last month, but it fell through as President Trump did not approve it. President Keller-Sutter said, "Ultimately, it is up to the U.S. President whether to accept the proposals worked on by his negotiating team. We are not the only ones whose proposals have been rejected. The power dynamic (between Switzerland and the U.S.) is clear, but we also have a few cards to play."

Concerns about an economic downturn are even arising due to Switzerland facing the highest tariff rate among developed countries. However, Eric Scheidegger, Director of Economic Policy, countered that it is far from a severe crisis where GDP decreases by more than 2%, stating, "We will have to be satisfied with a growth rate of 0.5% to 1.0%."

The Swiss government has decided to compensate for private sector damages caused by the tariffs through a short-time work compensation scheme and to extend the application period from the current maximum of 18 months to 24 months. Short-time work compensation is a system where the government pays wages to maintain employment during economic crisis situations, such as the COVID-19 pandemic.

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