Swiss Manufacturing Faces U.S. Tariffs: Implications for the Swiss IT Industry

The U.S., alongside Europe, is one of Switzerland’s most important export markets. However, trade relations have hit a low due to President Trump’s protectionist policies. As of August 7, U.S. tariffs of 39% on Swiss products are in effect.

Switzerland belongs to those countries where foreign trade makes up a large share of GDP. This is especially true for products from the chemical and pharmaceutical industries, which accounted for 53% of Switzerland’s overall export goods in 2024, and the Swiss mechanical, electrical, and metal (MEM) industry (24% of exports).

U.S. tariffs on Swiss products are in effect – and they will hit the Swiss manufacturing industry hard.

Large enterprises like Sika, Ems-Chemie, Nestlé, and large discrete manufacturers such as ABB are organized in a decentralized manner and manufacture almost all the products sold in the U.S. locally (or at least a large portion of them, as is the case with Lindt & Sprüngli).

However, the Swiss manufacturing industry is characterized by its large number of small and medium-sized enterprises (SMEs), many of which export to the U.S. but do not have production facilities there. According to a survey by Swissmem, the association for the Swiss mechanical, metal, and electrical engineering industries, only about one-third of the members surveyed have a production site in the U.S.; among SMEs, it’s only around 25% (the survey assumed a 31% U.S. tariff).

More than half the respondents expect moderate to severe margin impacts, as they can only partially, or not at all, pass on tariff costs to customers. Although the U.S. aims to boost domestic manufacturing through these tariffs, most Swissmem member companies are not responding with increased U.S. investment: only 14% plan or are considering setting up local production facilities in the U.S.

Some public sources say that, due to the 39% tariff, Switzerland’s GDP could decline by 0.3-0.6%. If the currently exempt pharmaceutical industry were to be affected as well, the decline could be even greater.

Frequent U.S. policy changes put pressure on the pharma-chemical industry.

The pharma-chemical industry is under pressure from frequent policy shifts by the U.S. government. Swiss pharmaceutical companies, in particular, rely heavily on exports to the U.S., with over CHF 35 billion worth of products shipped there in 2024.

Until August 4, 2025, it was understood that some exceptions applied to tariffs on chemical-pharmaceutical products. Nonetheless, both Roche and Novartis have announced multi-billion-dollar investments in the U.S. On August 5, President Donald Trump announced potential new tariffs on pharmaceutical imports. In an interview with CNBC, he said he would start with a “small tariff” on medicines and then increase it to 150% and later to 250%, the highest rate he has threatened so far. In short, Trump’s unpredictable trade policies continue to create considerable uncertainty for the industry.

Steep U.S. tariffs and the resulting strain on Swiss exporters are also expected to significantly impact the domestic IT market.

The Swiss domestic IT market is poised for major shifts in how companies invest in technology and engage with IT service providers.

• Due to tighter margins and economic uncertainty, Swiss manufacturers are expected to reprioritize their IT spending. Budgets will increasingly shift from “nice-to-have” innovation projects to solutions that improve efficiency and lower operational costs. Cost discipline on the shop floor is already catalyzing the demand for automation, especially lean and smart manufacturing solutions, as firms seek to protect profitability.
• At the same time, large-scale IT transformation projects, such as the migration to SAP S/4HANA, will remain non-negotiable. With SAP ECC approaching end-of-life, many enterprises are pushing forward with these strategic upgrades, even within a more conservative financial climate.
• Companies will prioritize IT investments that deliver immediate operational value, i.e., projects that enhance efficiency or drive cost reductions. Solutions focused on automation, both in production environments and across business processes, along with AI-powered insights, such as predictive maintenance and supply chain risk analytics, will be attractive. Vendors with proven expertise in deploying these technologies will have a clear advantage.
• Given their limited ability to relocate operations or absorb margin losses, SMEs are likely to come under severe pressure. At the same time, the need for external support may increase, as SMEs often lack in-house capabilities to manage large-scale IT projects or back-office functions. This opens the door to IT service providers that deliver cost-effective, packaged offerings tailored to the SME segment.
• Companies are expected to concentrate on their core operations, leading to greater willingness to outsource non-core functions (such as IT, finance, and HR). This will create opportunities for vendors providing managed services, hosting, and business process outsourcing (BPO).

More broadly speaking, the impact of these high U.S. tariffs may foster a shift in economic mindset, leading to an increased emphasis on digital sovereignty and resilience.

Clients may increasingly prioritize local vendors or those with a strong Swiss or EU footprint, both in terms of data hosting and support delivery. At the same time, (sovereign) cloud solutions will be increasingly attractive as they offer the agility and flexibility to scale operations up or down as needed while maintaining control over critical infrastructure. However, even with a sovereignty mindset, many IT solutions (cloud, platforms, software) still rely on global providers, limiting the scope of purely local (and/or affordable) alternatives.

We believe that external partners who understand not only IT but also the unique processes and operational challenges of the Swiss life science and MEM sectors will be favored.

Our PAC market scenario for the Swiss software and IT services market will be updated in the coming weeks. Today’s scenario reflects the more cautious approach we have seen in the past few days and weeks. However, the situation remains so volatile that further changes are likely as the tariffs are implemented.