As the US imposes punitive tariffs of 39 percent, some Swiss politicians are responding with what can only be described as economic escapism: calls for short-time work until Donald Trump leaves office. That, at least, is the solution floated in a recent article in «Tages-Anzeiger» (paywalled).

The idea is no more sound than the proposal by certain economists during the COVID-19 pandemic to «freeze» the Swiss economy. Yet, astonishingly, Switzerland's State Secretariat for Economic Affairs (SECO) appears to nod in agreement.

Wishful Thinking in a World That Moves On

Neither the US nor the EU is waiting for Switzerland. And certainly not for months or even years. What makes the short-term work proposal especially problematic is the growing likelihood that Trump’s economic nationalism will persist even after his presidency, possibly under successors like J.D. Vance or Marco Rubio.

The US is set on rebuilding its industrial base, using tariffs as a primary policy tool. Washington is, of course, aware that this approach entails a cost to national prosperity. But regaining control over strategic industries is seen as worth the price. This is a sovereign political choice – one that Switzerland must accept, whether it agrees or not.

Switzerland’s Real Problem Is Domestic

Rather than wallowing in victimhood, threatening retaliatory tariffs (as Centre Party leader Matthias Bregy has done), or retreating hastily into the embrace of a framework agreement that would subject the country to foreign laws, judges, and regulators, Switzerland should focus on addressing its own internal weaknesses.

The root causes of the current malaise lie at home: years of misguided monetary policy by the Swiss National Bank (SNB), protectionism in the pharmaceutical sector that stifles innovation, unchecked expansion of the state, and an ever-growing thicket of regulation strangling the private sector.

The SNB’s prolonged zero-interest-rate policy aimed to weaken the Swiss franc to support exports. The result? A central bank balance sheet bloated with euro and dollar assets equivalent to the country’s entire GDP.

Monetary Policy That Created Zombies

This approach has zombified entire industries. Companies survive not through competitiveness but on the lifeline of cheap credit. Migration pressures intensify, pension funds are hollowed out, and consumption becomes more expensive. The US has repeatedly warned Switzerland about these distortions, which jeopardize the global trade balance.

Swiss negotiators could have entered the room in Washington with strong cards to play: a commitment to more realistic monetary policy, an end to protectionism in pharma, and a plan to reduce regulatory burdens to restore the forces of market competition.

The «Tariff Hammer» Is a Wake-Up Call

Donald Trump’s tariff hammer should serve as a wake-up call for Switzerland. The country needs less government, not more—less bureaucracy, more open markets, more competition, and above all, a realistic, rules-based monetary policy.

If the political will exists, a credible reform agenda could be outlined within two weeks. That would be good for Switzerland and a strong signal to the U.S. that the country has understood the message – fittingly, around Swiss National Day.

Postscript

What Switzerland needs is a more self-confident and unified Federal Council – one that defends national interests clearly and consistently, both toward the EU and the US, and that treats foreign counterparts with respect, even if it disagrees with them.

It was always obvious how Switzerland should have conducted its dialogue with the Trump administration, including with Trump himself. And equally obvious that a foreign minister who chooses this very moment to campaign for a Palestinian state is not acting in Switzerland’s best interest.