Switzerland Proposes US Gold Refinery to Reduce Tariffs

Switzerland Seeks US Gold Industry Boost to Avert Tariffs

Switzerland is proposing that its gold industry build a refinery or increase its processing capacity in the United States as part of a plan to lower US trade tariffs, according to two sources familiar with the matter. This move comes after then-President Donald Trump imposed a 39% tariff on Swiss goods imports in August 2023, citing a trade deficit between the two countries. Switzerland had previously eliminated its own industrial tariffs earlier that year.

The goods trade deficit between the United States and Switzerland is primarily due to Swiss exports of chemicals, pharmaceuticals, and gold. Since the tariffs were enacted, the Swiss government and private sector have been working together to find solutions to lower them.

Switzerland is a top gold refining nation, and the proposal involves the gold industry increasing its refining capacity in the United States to help balance trade flows. This could involve building a new refinery or investing in additional capacity, sources suggest.

The Swiss economics ministry declined to comment on these confidential talks with the United States, which are ongoing at various levels.

The Role of the Swiss Association of Precious Metals

Christoph Wild, president of the Swiss Association of Precious Metals (ASFCMP), declined to comment on the possibility of building a refinery. However, he noted that as long as gold contributes to the trade deficit, the industry must explore ways to prevent it. "This could even be achieved by satisfying US needs within the US borders," he said.

Swiss economics minister Guy Parmelin held what he described as "constructive" talks with senior economic officials in the Trump administration last week. Sources indicated that the gold plan was already in place, and negotiations between the two countries are underway.

Comprehensive Swiss Efforts

Switzerland has been striving to present Trump with a proposal that includes both purchases of US goods and additional investments in the United States. To reduce the deficit caused by the pharmaceutical industry, the goal is for Swiss companies to meet all US needs with products manufactured in the US.

Sources add that this could even include enough additional production to enable Swiss pharmaceutical companies to export drugs from the United States.

Switzerland hopes that this would exempt Swiss pharmaceutical companies from any potential tariffs resulting from a separate, so-called US "Section 232" investigation, which aims to determine whether US reliance on foreign drug production threatens national security.

Potential Challenges

The Swiss pharmaceutical industry association, Interpharma, has argued that once the service sector is factored in, the US does not actually have a deficit, and that eliminating the goods deficit at the expense of pharmaceutical companies would harm the Swiss economy.

However, the association noted that increasing domestic production to cater to large markets has become a common trend. While increasing production in the United States could alleviate pressure on Switzerland, it could also harm its status as a pharmaceutical hub.

The Swiss government also intends to increase its purchases of US military equipment and allow the United States to sell more liquefied natural gas through and to Switzerland.

To help balance trade, the plan also involves Swiss companies registering more energy deals through Switzerland rather than London.

The Future of US-Swiss Trade Relations

Switzerland is clearly making significant efforts to maintain good trade relations with the United States and avoid tariffs. It remains to be seen whether these efforts will bear fruit, but it is clear that Switzerland is committed to finding innovative solutions to the trade challenges it faces.