Trump’s customs policy and the effects on the Swiss SME Fraisa

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In a large factory hall in the Solothurn Mittelland. Furthermore, in front of a machine that is trump’s customs policy effects swiss more expensive than three single -family houses and with a metal pen, things that are neither seen nor understand correctly: This is why it becomes clear why Donald Trump’s tariffs against Switzerland can almost only create losers. In addition, Many Swiss companies will hit them brutally. Similarly, In return, will the Americans benefit that more industrial companies shift their production to the USA?

This is unimaginable for Thomas Nägelin. Similarly, He is CEO of the Fraisa Group. Nevertheless, a classic industrial company in family-owned, as you can find in the Jurasüdfuss. However, The area between Biel and Solothurn is one of those who should be shaken most by trump’s customs policy effects swiss Trump’s tariffs.

The headquarters of the Fraisa is in Bellach near the city of Solothurn. In addition, the company has over 500 employees at seven locations in Europe, China and the USA. Nevertheless, For a long time there was even an independent production in America, but the Fraisa closed it six years ago. In addition, With a reopening, it could avoid the 39 percent customs. Furthermore, But she won’t do it.

What the Fraisa produces is the opposite of Trump’s customs duties: extremely precisely, extremely predictable, maximum resistant. In addition, It produces tools for the processing of metal. Furthermore, which are harder than steel, some even almost as hard as a diamond. Therefore, These parts are coated with ions by diamonds so that they last as long as possible. Consequently, drill and mill on trump’s customs policy effects swiss the micrometer. For example, There are also many companies in the United States that use such tools, at least so far.

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“I see black for such companies” – Trump's customs policy effects swiss

The Fraisa boss knows the situation of Swiss industry from many years of experience. Moreover, exchange with many colleagues. Consequently, For over twenty years, Thomas Nägelin has been on the board of Swissmem, the association of the machine industry. Therefore, He is also a VR President of Simatec. Nevertheless, another industrial SME in the region that opened a new building for sales and assembly a year ago in the USA. In the short term, this is now an advantage to cushion the tariffs.

Nevertheless, the matter has not been quite comfortable since Trump’s taking office, says Nägelin. “We industrialists are forced to think in the long term. even if a real estate agent like Trump cannot imagine it.” Companies like the Fraisa could not simply cancel and move their locations if it doesn’t go well. «We need reliability. But there trump’s customs policy effects swiss are no longer in the United States. »

The new tariffs came into force on Thursday morning. Thomas Nägelin divides Swiss companies in three categories. The hardest affects those who supply their customers in the United States directly from Switzerland. You have little opportunities to avoid the 39 percent surcharge or at least to cushion it. Either they wear it themselves, or they manage to pass it on to the customers in whole or in part. Both are extremely difficult. “I see black for such companies,” says Nägelin. An inch of this height is “quite fatal”.

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At the other end of the scale there are those companies. that are already operating production works in the USA. You could best react by moving further parts of the production to America. supplying your customers there duty -free from there.

Deeper tariffs thanks to internal offsetting

In between are the companies that supply their customers in the United States either through an independent middleman. on site. The Fraisa, which lives 80 percent from export, belongs to this group. In Arden Hills, a city in the member of trump’s customs policy effects swiss Minnesota, she runs her own subsidiary for sales and service. This opens up potential to cushion the shock.

In this case. the prices that the end customer pays in the United States are decisive for customs, but the transfer prices that are charged within the company for deliveries to the daughter in Minnesota. From a pure customs logic it would be tempting to immediately set these prices significantly lower to press the tariffs. But in this case, the tax authorities will soon report because they see an unauthorized difference in profits.

In the case of the Fraisa. the prices for internal offsetting, according to Nägelin, were about half as high as the final prices. This reduces the load from the tariffs to the same extent. In addition, there is another advantage that the company trump’s customs policy effects swiss has obtained through its geographical structure.

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In the words of the CEO: “Our value chain is consistently internationalized.” The European central warehouse is located in Germany, and Fraisa began building a second production site in Hungary 25 years ago. For the tools that are manufactured there. the horrendous customs that Trump on Switzerland is trump’s customs policy effects swiss based does not apply, but “only” the 15 percent that he has imposed on the EU.

Price increase in front of the shock

Then there was a little luck: Chance wants the Fraisa to produce most of its products for the US market in Switzerland. but in Hungary. The bottom line is that it can significantly dampen the additional load. Fraisa has increased the final prices for customers in the USA by 10 percent. “We hope that we will make ends meet,” says Nägelin. The decision was made in July when hardly anyone expected Trump to increase tariffs to 39 percent. “But we couldn’t wait any longer, the uncertainty had been taking too long, so no company can lead.”

If it had already been clear in trump’s customs policy effects swiss July that the tariffs. would be even higher: Had the Fraisa have increased prices more? “Quite possible,” says Nägelin, “but now we stick to our decision. Just because Trump is unpredictable, we shouldn’t be. » However. one thing is clear: No losses will be accepted in the trade with customers in the USA, just to stay in the market. “Sales without profit does nothing.”

Nägelin hopes that the bill will work. But how will the US customers react? The majority should accept the price increase, the CEO estimates. “But we will certainly lose part of our customers, that cannot be changed.” The Fraisa can cope with this – “in contrast to many other companies I know”. If the high tariffs stayed in force for a long time. it then calculates with the worst: with short -time work, but also with the loss trump’s customs policy effects swiss of many jobs and with competitions.

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And even if the tariffs sink again soon, Thomas Nägelin does not expect to calm down. “Trump has been unpredictable since taking office in January.” For the Fraisa. it is therefore even more clear that the production of production to the USA is out of the question. You trump’s customs policy effects swiss can hardly find any specialists there anyway. and if they do, then the wage costs are practically the same as in Switzerland. There would also be quality problems.

What if Trump makes school?

How should Swiss politics deal with it? “We have to negotiate with the United States, I feel sorry for the federal councils involved.” Above all, however, Switzerland must expand free trade and secure relationships with the European Union, “its home market”. Nägelin clearly speaks for the new bilateral contracts with the EU. Not only for the Fraisa. but for the Swiss export industry as a whole, Europe is significantly more important than the United States. The lawsuit that the new agreements sew in relation to the EU is in the interests of Switzerland as. a smaller partner.

“Just imagine that Trump makes school: If the EU also starts blackmailing us with tariffs at some point. we have little chance to defend ourselves politically.” Without the new contracts. Nägelin also sees the risk that international companies such as Fraisa would no longer have the opportunity to set up geographically from Switzerland in such a way that they can catch shocks like the 39 percent customs.

If it is based on the Fraisa boss. relationships with the EU should be as stable as the tools that his company produces. “Let’s not do anything: We owe primarily to close networking with the EU that we can deal with Trump somehow.”