Posted on: 13 February 2026
Donald Trump admitted on Fox Business that he raised tariffs on Switzerland from 30 to 39 per cent because he did not care for the tone of voice of his counterpart on the telephone. His exact words: "I didn't really like the way she talked to us, so instead of giving her a reduction, I raised her to 39%." He was referring to Karin Keller-Sutter, whom he called "Prime Minister of Switzerland" twice during the interview. Switzerland does not have a prime minister. Those who stop at the surface see the whim of a powerful man. Those who look at the mechanism see something far more interesting, and far more structural.
Start with the numbers, because the numbers tell a different story from the one being presented. Trump cites a trade deficit of $42 billion with Switzerland. The actual 2024 figure for goods is $38.5 billion, according to the USTR and the Bureau of Economic Analysis. But this number tells only half the story. Include services, where the United States runs a $29.7 billion surplus with Switzerland, and the real deficit drops to roughly $8.6 billion, as FactCheck.org has documented. There is more: since January 2024, Switzerland has unilaterally eliminated all tariffs on industrial goods. Over 99 per cent of American products enter the country duty-free, as the Swiss government stated in an official communication on 4 August 2025. Average Swiss tariffs on American products stand at 0.2 per cent. American tariffs on Switzerland reached 39 per cent. The asymmetry is not a flaw in the system; it is the system.
This is where the mechanism that is genuinely worth understanding comes into play, because it will repeat. Switzerland is not an ordinary country in the global trade landscape: it is a country whose currency functions as a safe haven asset. Every time the world trembles, whether from a pandemic, a trade war, or a geopolitical crisis, money flows towards the Swiss franc. This phenomenon, which under normal circumstances would signal economic soundness, becomes a permanent structural problem for the Swiss National Bank. An excessively strong franc makes exports dearer, imports cheaper, and pushes the country towards deflation. According to CNBC data from June 2025, the franc had appreciated 9.5 per cent against the dollar since the start of the year, and Switzerland had already slipped into deflation in May, with prices falling 0.1 per cent year on year. The SNB had cut rates from 1.75 per cent in early 2024 to 0.25 per cent, and analysts at ING and Capital Economics were openly discussing a return to negative interest rates. In October 2025, as Bloomberg reported through SWI swissinfo.ch, the SNB was suspected of having intervened in currency markets after the franc approached a decade-high against the euro.
The paradox is this: the very policies that create global turbulence, American tariffs chief among them, strengthen the franc and worsen Switzerland's deflationary problem. The American weapon strikes twice. First through the tariff itself. Second through the safe-haven effect that trade chaos generates on the Swiss currency. This is a double structural penalty that no other European country suffers to the same degree, because no other European country has a currency that simultaneously functions as a barometer of global fear. British readers will note that the United Kingdom, despite having its own independent currency, does not face this particular trap: sterling moves with risk sentiment rather than against it, and the Bank of England's inflation problem runs in precisely the opposite direction.
Now, the remark about tone of voice. Taken at face value it appears deranged. But anyone who has watched Trump negotiate over the years recognises a different pattern: calculated unpredictability. The same sequence has played out with Canada, China, and the European Union. Communicative chaos, excessive threats, then a retreat towards a landing point that was likely the real objective from the start. Tariffs on Switzerland went from 30 to 39 per cent in August, then down to 15 in November, under an agreement that commits Swiss companies to $200 billion of investment in the United States by 2028, with $67 billion in 2026 alone. According to the White House fact sheet, Roche, Novartis, ABB and Stadler have already announced projects tied to the deal. The deadline for finalising the complete agreement is 31 March 2026, as specified in the Federal Register of 18 December 2025.
The point is not whether Trump is erratic or shrewd. The point is that the mechanism works regardless of the president's personal intentions, and this matters far more than any character analysis. A small, wealthy, export-dependent country with a safe-haven currency that strengthens precisely in moments of maximum external pressure has structurally limited bargaining power against the world's largest economy. It does not matter who sits in the White House. It does not matter whether the tariff was raised for strategic reasons or on impulse during a phone call. The outcome is identical: Switzerland pays 15 per cent on a trade relationship in which the real deficit, goods and services combined, is a fraction of the one declared. And it pledges $200 billion in investment that amounts, in substance, to a market-access tribute.
There is a historical analogy that illuminates the mechanism. In imperial tributary systems, peripheral provinces paid in proportion not to actual wealth, but to perceived vulnerability. The wealthiest but most militarily exposed provinces paid more, not less. The tribute was calibrated not on fairness, but on how much the tributary could bear before revolting, and on how little it could do if it tried. Switzerland occupies an analogous position: prosperous, stable, but structurally exposed on two fronts simultaneously, trade and currency, and without the pressure instruments that other trading partners can deploy. It does not have an internal market of 450 million consumers like the European Union. It does not have rare earths or critical semiconductors like Taiwan. It does not even have oil as leverage. It has pharmaceuticals, precision instruments, financial services, and a franc that the entire world wants to buy at precisely the wrong moments.
The "Prime Minister" error deserves attention precisely because it is not an isolated gaffe. Trump repeated the same phrase both in the Fox Business interview and in his speech at the World Economic Forum in Davos in January. He did not correct himself, nobody around him corrected him, and quite probably nobody even noticed. Switzerland does not have a prime minister; it has a seven-member Federal Council and a presidency that rotates annually, a system designed expressly to prevent the concentration of power in a single individual. But for those who think in terms of "who is in charge", this architecture is simply invisible. And what is invisible carries no negotiating weight. When your counterpart does not know how your system of government works, the negotiation begins with a recognition deficit that no trade data can offset. It is not disrespect; it is something worse: it is perceived irrelevance.
What observers ought to be asking is not why Trump behaves this way towards Switzerland. The correct question is: which structural conditions make this outcome nearly inevitable, and will they recur? The answer is yes, they will. Every time global uncertainty rises, the franc will strengthen. Every time the franc strengthens, the SNB will have less room for manoeuvre. And every time an American president, whoever it may be, seeks to rebalance goods trade deficits while ignoring services, Switzerland will sit near the top of the list of easy targets: visible surplus in goods, small country, no capacity for military retaliation, no comparable geopolitical leverage. The November deal is not the solution; it is the template for what will happen again. According to Lombard Odier, the agreement reduces the estimated impact on Swiss GDP from 0.5 to 0.2 per cent in 2026. A contained amount of damage, certainly. But permanent damage in the sense that the mechanism producing it is embedded in the very structure of the relationship.
The public debate around this episode has a conspicuous blind spot. Commentators divide into those who mock Trump for impulsiveness and those who celebrate his negotiating prowess. Both readings miss the mechanism. It is not the man who produces this outcome; it is the architecture. A small country with a visible trade surplus, without proportionate retaliatory capacity, whose currency strengthens precisely when its trading partner creates turbulence, will always pay an access premium. Whether the president's name is Trump or anyone else, the structural calculus remains identical. Switzerland is in the position of a player who must accept the table's rules in order to keep playing, knowing that the rules may change with every hand. The next renegotiation will come. It might concern pharmaceuticals, it might be linked to Greenland, it might have an entirely different pretext. The underlying mechanism will not change. For those managing transatlantic trade or investment exposure, the lesson is not in the anecdote about the phone call. It is in recognising that the combination of safe-haven currency, export-driven economy, and dimensional asymmetry creates a vulnerability that no amount of diplomatic finesse can entirely remove.