US tariffs: Reaction from South Africa and Switzerland

JOHANNESBURG/GENEVA: How to deal with the US tariffs introduced by President Donald Trump is a Chinese puzzle that every capital in the world is currently trying to solve.

Barring China and some others like Brazil, most of the countries are aiming at present an offer so sweet that can make the Trump administration soften its position.

The powerful European Union is an example. After much hard talk, the bloc agreed to a minimum 15 per cent preposition. Higher tariffs on some specific commodities or goods are in addition to that.

So the European giants like France and Germany witnessed their leadership expressing their unhappiness over the EU-US deal which needs to be formalised and approved by each EU member state.

Read more: Macron wary of EU-US trade deal as Merz sees damage to Germany

It means that all the talk about France coordinating with German Chancellor Friedrich Merz and other European counterparts on how to respond to the incoming US tariffs did not produce anything significant.

Read more: Macron for trade stability, lowest tariffs

Meanwhile, South Africa and Switzerland became two latest countries which expressed their views on the Trump tariffs on Monday. The former termed these “very punitive” while later mentioned “more attractive offer”.

TENS OF THOUSANDS OF JOBS AT RISK

President Cyril Ramaphosa on Monday called US tariffs set to hit certain South African exports this week “very punitive” and said his country would seek to limit their impact, AFP reported.

“While we must act with urgency and purpose to limit the impact of these very punitive tariffs, we must also undertake measures to ensure the resilience of our economy and exports into the future,” Ramaphosa told journalists following a political party meeting in Johannesburg.

The day also saw South African authorities saying that the US tariffs have put tens of thousands of jobs at risk, especially in agriculture and automobile sectors.

Meanwhile, the 30 per cent US tariff on most imports from South Africa kick in on August 8.

South Africa was slapped with one of the highest tariff rates by its third-largest trading partner. China and and the EU are the top two.

It has created uncertainty for the future of some export industries and catapulting a scramble for new markets.

ONE OF THE HIGHEST

On the other hand, Switzerland said it was ready to make a better offer to the United States to avoid steep tariffs that have shocked the country.

The Alpine nation faces a 39 per cent duty, one of the highest among the dozens of economies that will be hit by new tariffs expected to come into force from Thursday.

The Swiss stock market tumbled by more than two per cent when it opened on Monday before paring its losses later in the day, ending the day down just 0.15 per cent. It was closed for a national holiday when Trump unveiled the tariffs on Friday.

Trump had originally threatened in April to slap a 31-percent tariff on Switzerland, which swiftly decided to negotiate with the United States.

MORE THAN EU

By comparison, the 27-nation European Union struck its own deal with Trump and will face tariffs of 15 percent, down from a previous threat of 30 per cent.

Swiss President Karin Keller-Sutter has said Trump believes that Switzerland “steals” from the United States by enjoying a trade surplus of 40 billion Swiss francs ($50 billion).

The Swiss Federal Council said after an emergency meeting on Monday that it would “continue negotiations with the aim of reaching a trade deal”, even beyond the Thursday deadline.

“Switzerland enters this new phase ready to present a more attractive offer, taking US concerns into account and seeking to ease the current tariff situation,” the council said in a statement.

It said the looming tariff put the country “at a distinct disadvantage compared with other trading partners with similar economic profiles”, citing lower duties for the EU, Britain and Japan.

US Trade Representative Jamieson Greer, however, warned on Sunday that “the coming days” were not likely to see changes in any duties as the “tariff rates are pretty much set”.

SWISS EXPORTS

Hans Gersbach, deputy head of the KOF Swiss Economic Institute, said the tariffs could cut the country’s annual growth by between 0.3 and 0.6 per cent.

But it could be as much as 0.7 per cent if Trump targets the pharmaceutical industry, which has so far been exempt from tariffs.

Pharmaceutical products account for more than half of Swiss exports, the economist noted.

Analysts at Swiss investment managers Vontobel said in a note that they believed “there is some hope for an agreement on US tariffs for Switzerland” that would bring them down to the 15 per cent set for other countries.

TOUGH BLOW

XTB Research Director Kathleen Brooks said the recovery of the Swiss stock market during the day on Monday “is a sign that investors are optimistic about the prospect of a lower levy being negotiated in the coming days”.

But Vontobel analysts added that if the 39 per cent tariffs remain in place, earnings for key sectors such as watchmakers “could be hit substantially”.

The chocolate industry association, Chocosuisse, said the tariffs were a “tough blow” for the sector, which is already reeling from a 10 per cent duty.

“It is particularly shocking that Switzerland finds itself at a distinct disadvantage compared to all other Western industrialised countries,” it said in a statement, urging the government to continue negotiating.

GOLD TRADE

Swiss media said the government could point to distortions in the gold trade during the negotiations as it inflates the country’s trade surplus with the United States.

Switzerland is home to refineries where imported gold bars — mostly from Britain — are melted down to meet US standards.

These gold transactions create a statistical distortion in trade figures, according to the Sunday newspaper SonntagsZeitung, which suggests pointing out that they give the impression Switzerland exports more to the US than it actually does.