Trump cuts Swiss tariff from 39% to 15% after Roche and Novartis promise $73 billion in U.S. factories

President Trump imposed a 39% tariff on Switzerland in August 2025 — one of the highest rates levied on any U.S. trading partner — using authority he claimed under the International Emergency Economic Powers Act (IEEPA). Swiss pharmaceutical exports to the U.S. totaled $35.5 billion in 2024, nearly half of Switzerland's entire American trade relationship.

Roche and Novartis, the two Swiss drugmakers most exposed to the tariff, faced an existential threat to their U.S. business. Roche generates roughly 40% of its global pharmaceutical revenue from American sales; Novartis derives a similar share. Both companies entered bilateral negotiations with U.S. trade representatives within weeks of the August tariff announcement.

On Nov. 14, 2025, the U.S. and Switzerland announced a framework trade agreement capping tariffs at 15% — matching the EU tariff rate — in exchange for a pledge by Swiss companies to invest at least $200 billion in the United States by the end of 2028. The deal also protected Switzerland from forthcoming Section 232 national security tariffs on pharmaceuticals, which could have reached 100% on certain patented drugs.

Roche committed $50 billion to build gene therapy plants in Pennsylvania, a drug manufacturing facility in North Carolina, and research hubs in Indiana, California, and Massachusetts — creating an estimated 12,000 jobs. Novartis pledged $23 billion for manufacturing sites in North Carolina, Florida, and Texas, adding 5,000 more jobs. Together, the two companies' $73 billion commitment formed the core of Switzerland's justification for the tariff cut.

At least $67 billion of the broader $200 billion Swiss investment pledge was committed for 2026 alone.

IEEPA grants the president emergency economic powers in times of "unusual and extraordinary threat," but the statute doesn't use the words "tariffs," "duties," or "imposts." A federal appeals court ruled in August 2025 that IEEPA doesn't authorize tariff authority because Congress didn't explicitly delegate that power — a ruling the Supreme Court ultimately affirmed in February 2026 in a 6-3 decision.

The Supreme Court's February 2026 IEEPA decision created retroactive refund liability for customs duties collected between August and November 2025. The government had collected an estimated $88 billion in IEEPA tariff revenue through that period, and importers — including Swiss pharmaceutical distributors — became eligible to file refund claims, complicating the fiscal picture of the tariff strategy.

The Switzerland deal established a negotiating template visible across multiple subsequent bilateral talks: countries facing prohibitive U.S. tariffs could secure reduced rates by committing to large domestic manufacturing investments. This framework shifts supply chain decisions from market economics to bilateral political negotiation, with tariff rates becoming leverage for reshoring rather than trade barriers designed to protect domestic producers.

American consumers paid elevated prices on Swiss imports during the four-month tariff period from August to November 2025. The deal applied retroactively to Nov. 14 for customs refunds, but neither companies nor consumers could recover the costs of price increases, contract disruptions, or supply chain rerouting that occurred before the agreement was signed.