US trade policy
USA: What the tariff deal means for the textile industry
After tough negotiations, a customs deal was reached between Switzerland and the USA in mid-November. At last. The new rate is 15 per cent instead of the previous 39 per cent. Like many sectors, the textile and clothing industry can breathe a sigh of relief. The same high duties now apply as in the EU. At the same time, the deal is no cause for excessive celebration, but rather the starting signal for further stabilising measures.
The Trump board Image: Keystone
After more than three months under tariffs of 39 per cent, Switzerland was able to conclude a customs deal with the USA. The domestic textile and clothing industry was in dire need of a reduction. Exports of textiles slumped by over 30 per cent in the third quarter, even though the tariffs only came into force on 7 August.
Switzerland was also threatened with losing the US market, as the EU had previously been better off with its lower tariff rate. Now 15 per cent or the existing MFN tariff applies, which may be slightly higher depending on the situation. This puts Switzerland and the EU on an equal footing.
The tariffs will come into force retroactively from 14 November. Companies that had to pay additional duties during this period can reclaim them from the relevant customs authority.
Deal goes to parliament
It is now crucial that the deal becomes legally binding as soon as possible. It may still take some time before this happens. This is because the deal is merely a legally non-binding agreement that is to be converted into an agreement in the coming weeks.
The National Council and Council of States will have to discuss this. As the international agreement is subject to an optional referendum, the newly reduced tariffs could be increased or reintroduced if the electorate rejects it. The parliamentary process is likely to take several months.
Switzerland has promised the USA several measures in return. For example, it wants to reduce tariffs on selected US products from the agricultural sector and invest USD 200 billion over the next three years. In addition, closer cooperation is planned in several technical areas. However, textiles and clothing are not specifically affected by this.
USA fifth most important export market for Swiss textiles
The USA is an important trading partner. Last year, the Swiss textile and clothing industry sold textiles worth 64 million Swiss francs to the USA - even before the punitive tariffs were introduced.
The United States was thus the fifth most important sales market for textiles. Its share of total exports was six per cent. However, demand fell by 15 per cent in the first three quarters - particularly in the months of August and September.
In the clothing sector, goods worth CHF 105 million went to the USA - here too, the USA was the fifth most important buyer. The share of total exports was four per cent.
Stable framework conditions essential
The past few months have shown how quickly the customs situation can change. The negotiated deal is not yet legally binding and must first go through parliament. It can be rejected there. Uncertainty harms the economy and foreign trade.
For this reason, the federal government must ensure that the economic framework conditions are stabilised. This includes
- ratifying pending free trade agreements such as Mercosur and Thailand as soon as possible
- a level playing field in online trade
- stabilised relations with the EU: the Bilaterals III must be dealt with as quickly as possible