The growing threats to ‘Swiss Made’ For decades the country’s exporters focused on adding value to their high-end products, but US tariffs, the fragmentation of global trade and the strong franc are now hitting them harder. 

Financial Times UK 25 Aug 2026 By Mer cedes Ruehl When US Pres id ent Don ald Trump hit Switzer land with tar iffs last year, Nabil Fran cis’s first reac tion was shock. “It was a wake-up call,” says Fran cis, the chief exec ut ive of Felco, a com pany known for its high-qual ity garden tools. “You under stood that the world was chan ging when Switzer land was treated dif fer ently to the EU.” For gen er a tions, Felco has made its sig na ture red-handled secateurs at its base among the green hills of the French-speak ing can ton of Neuchâtel. Around 95 per cent of pro duc tion is expor ted, with the fam ily-owned group count ing King Charles of the UK and US former first lady Michelle Obama among its cus tom ers. Sud denly, it faced a tar iff of 39 per cent on ship ments to its single biggest mar ket, com pared with a 15 per cent levy applied to EU-based rivals. But Fran cis’s response

was not to move pro duc tion to cheaper coun tries, nor to make Felco’s shears cheaper. Instead, it was to make them more expens ive and more desir able, adding options such as leather-wrapped handles, gold-coated blades and laser-engraved per son al isa tion. Felco’s strategy of doub ling down on qual ity is typ ical of Switzer land, where man u fac tur ing still accounts for almost 19 per cent of GDP, twice the con tri bu tion from its cel eb rated fin an cial ser vices industry. The white cross on a red back ground, emblazoned on products from Heule pre ci sion tools to Caran D’Ache pen cils, is both a guar an tee of qual ity that is under stood world wide, and a valu able mar ket ing device. But the play book is becom ing more diffi cult to execute as the franc appre ci ates and major trad ing part ners turn to pro tec tion ism and tar iffs. Moves to increase flex ib il ity by cre at ing addi tional defin i tions of Swiss ness besides “Swiss Made” have pro voked a back lash from law makers and man u fac tur ers. Switzer land this year slipped from first to third in a rank ing of global com pet it ive ness by IMD, the busi ness school, while its eco nomic per form ance rank ing plunged from 13th to 37th. “The Swiss model is hardly sus tain able in a world that is more frag men ted and more pro tec tion ist,” says Arturo Bris, pro fessor of fin ance at IMD. Swiss mem, the coun try’s largest indus trial asso ci ation, described 2025 as a “lost year” in which sales stag nated and 6,600 tech-industry jobs dis ap peared. A tent at ive but uneven recov ery is now under way, it added. Back in Neuchâtel, Fran cis acknow ledges there is “a limit to everything” in terms of premi umisa tion. But Felco has not yet reached it; a new range, set for launch in Septem ber, swaps the fam ous red for anod ised alu minium in bold col ours such as Elec tric Blue, Power Green, Pink Pas sion and Tan ger ine Blaze. He wants to turn the humble prun ing shear into a “life style object” like Le Creu set, whose brightly col oured cook ware is a kit chen style state ment. The focus will remain res ol utely upmar ket. “If you are an indus trial com pany pro du cing in Switzer land and export ing, you’re not going to shoot at the mass mar ket,” says Fran cis. “At that game, you will always lose.

A land locked coun try of 9mn people, with few nat ural resources and some of the world’s highest wages, is not an obvi ous start ing point for a man u fac tur ing suc cess story. But the Swiss made it work. Com pan ies respon ded to high wages and an appre ci at ing cur rency by becom ing more pro duct ive, more spe cial ised, more soph ist ic ated and more expens ive, while focus ing on global mar kets rather than their small domestic one. “Swiss Made” became short hand for the res ult: watches, machinery and pre ci sion tools good enough that cus tom ers around the world would pay extra for them. One of the res ults is an eco nomy unusu ally rich in rel at ively small com pan ies that dom in ate par tic u lar niches. They range from VAT, a maker of vacuum valves used in semi con ductor pro duc tion, to Burck hardt Com pres sion and spe cial ists such as Rondo, whose machines shape dough into pastries in baker ies around the world. The resi li ence of such hid den cham pi ons has helped the Alpine coun try to res ist much of the dein dus tri al isa tion that has swept through west ern Europe. Switzer land has the highest pro por tion of high-tech man u fac tur ing of any of the OECD’s 38 mem ber coun tries. That strength is under pinned by an unusu ally deep appren tice ship sys tem. About two-thirds of young Swiss pur sue voca tional edu ca tion and train ing, most learn ing partly inside com pan ies, sup ply ing employ ers with skilled work ers. Bern pushed its com mit ment to open mar kets still fur ther in Janu ary 2024 when it uni lat er ally abol ished all tar iffs on imports of indus trial goods. The gov ern ment argued that cheaper impor ted com pon ents would reduce costs for Swiss man u fac tur ers. But its vis ion of a lib eral, exportdriven suc cess story is increas ingly at odds with a more pro tec tion ist world. US tar iffs are encour aging com pan ies to man u fac ture closer to Amer ican cus tom ers, while China has long sup por ted indus tries deemed stra tegic and Europe has respon ded with sub sidies and policies favour ing pro duc tion inside the EU. The franc remains a per sist ent han di cap for Switzer land’s export ers. Its status as a haven cur rency means it tends to strengthen in peri ods of uncer tainty — the fin an cial crisis, the Covid-19 pan demic and the con flicts in Ukraine and the Middle East all served to make Swiss products more expens ive abroad.

“If you look back a couple of years at where the franc exchange rate was and where it is now, it is a won der Swiss com pan ies still exist,” says Urs Fur rer, dir ector of the Swiss SME Asso ci ation. Former Swiss National Bank chair Thomas Jordan argues that the franc’s real exchange rate has been “remark ably stable” in recent years. But he con cedes that adjust ment after steep rises requires major efforts from com pan ies. Like Fran cis, the Felco boss, Fur rer does not believe Switzer land can pre serve every kind of man u fac tur ing. “Mass pro duc tion of cheap, low-qual ity goods is not the future,” he says. Inside Felco’s fact ory, housed in an old watch-dial works, auto mated pre ci sion machines now hum and whirr where horo lo gists once worked. Fran cis says it has made no redund an cies dir ectly because of auto ma tion, which has allowed it to raise pro ductiv ity and keep pro duc tion in Switzer land while work ers move into new roles. Every shear is still assembled by hand, mean ing Felco com plies with strengthened “Swiss ness” legis la tion that came into force in 2017. This sets out that for most indus trial products, at least 60 per cent of man u fac tur ing costs must gen er ally be incurred in Switzer land and an essen tial man u fac tur ing step must take place there for the product to qual ify as “Swiss Made”. But at Bern ina, a 133-year-old maker of sew ing machines, pro duc tion this year moved from Steck born in east ern Switzer land to its fact ory in Thai l and. The com pany blamed the strong franc and diffi cult con di tions in the US, which accounts for almost three-quar ters of its sales. Bern ina will retain more than 300 employ ees in Steck born, along with devel op ment, pro to type con struc tion, test ing and qual ity man age ment. “The DNA of Bern ina is and remains Swiss,” says chief exec ut ive Kai Hil l eb randt, even if Swiss pro duc tion could “no longer be eco nom ic ally jus ti fied” and its sew ing machines can no longer be described as “Swiss Made”. Com pan ies can now use altern at ive descrip tions involving the fam ous white-on-red cross, such as “Swiss Engin eer ing” or “Swiss Research”, sub ject to cer tain con di tions, after the Swiss Fed eral Insti tute of Intel lec tual Prop erty (IPI) loosened its inter pret a tion of the Swiss ness rules in March, cit ing the strong franc and US tar iffs. The change fol lowed a long-run ning dis pute involving On, the Zurich-based maker of sports shoes backed by former ten nis star Roger Federer, which had been put ting a Swiss cross on shoes made in Asia.

On said it man u fac tures abroad because the sup ply chain for large-scale pro duc tion does not exist in Europe. But it argues that much of the value in its products — design, engin eer ing, tech no logy and intel lec tual prop erty — is cre ated in Switzer land, and that it should be able to high light this. But Swiss ness Enforce ment, a pub licprivate entity cre ated to com bat mis use of Swiss indic a tions, argued that doing so breached the rules, because the shoes were not Swiss-made. “Why do you want to use the Swiss trade mark?” says David Stärkle, its man aging dir ector. “You want to profit from the value of the repu ta tion.” Swiss busi ness news pa per NZZ am Son ntag has repor ted that On put pres sure on the IPI, includ ing threat en ing a state-liab il ity law suit if the author ity’s actions caused it losses in China. On has “strongly rejec ted” the sug ges tion and said its cor res pond ence was part of a nor mal pro cess of seek ing legal clar ity. Since the IPI’s change, politi cians have filed motions seek ing to tighten the rules again. “The Swiss cross must not be put on products man u fac tured abroad — full stop,” centre-right law maker Daniela Schnee ber ger has said. Indus trial organ isa tions have also expressed dis may. Nic ola Tettamanti, pres id ent of Swiss mech anic, which rep res ents more than 1,000 SMEs, says his mem bers remain strongly attached to “Swiss Made”. He expects pro duc tion that sur vives in Switzer land to become increas ingly spe cial ised and tech no lo gic ally demand ing as robot ics and AI com pensate for high costs. “We have a chance in Switzer land,” he said, if com pan ies remain above aver age in tech no logy, qual ity and speed. Other Swiss com pan ies have taken dif fer ent approaches. Vic torinox still makes its fam ous Swiss Army knives in Switzer land but its lug gage is designed in the coun try and man u fac tured in Asia, bear ing a white cross on a black, coat-of-arms-style emblem instead of the tra di tional white-on-red logo. When Tobler one’s US owner Mondelez shif ted some pro duc tion of the chocol ate to Slov akia, Swiss ness rules meant it could no longer use the image of the Mat ter horn and other indic a tions of Swiss proven ance on its pack aging. But repla cing the fam ous moun tain with a gen eric peak and chan ging the word ing has not den ted sales. La Prairie, the lux ury skin care brand owned by Ger many’s Bei ersdorf, has deepened its Swiss roots, mov ing its global mar ket ing team back from New York

and in 2022 tak ing full con trol of the St Gal len com pany that man u fac tures most of its skin care col lec tions. “Swiss ness is more than our coun try of ori gin, it is part of who we are,” says Estelle Létang, La Prairie’s CEO. “Our Swiss her it age con tin ues to shape how we innov ate,” she adds, although the eco nom ics are helped by the price tags: 50ml of its Skin Caviar Luxe Cream sells for about SFr650 ($810). Switzer land is far from alone in con front ing these pres sures, but there are reas ons for its industry to be con fid ent. It retains one of the most soph ist ic ated, diverse indus trial bases in the world, while auto ma tion is redu cing the share of labour costs in some sec tors. The man u fac tur ing that remains may become still more spe cial ised, auto mated and con cen trated in areas where Swiss pre ci sion still jus ti fies the cost. Stefan Brup bacher, dir ector of Swiss mem, argues that there is little altern at ive to this approach. “Swiss industry is too diverse to choose a hand ful of sec tors or com pan ies to sub sid ise,” he says. The long stand ing bar gain is that com pan ies accept global com pet i tion while the gov ern ment provides the frame work in which they can com pete: access to mar kets, strong edu ca tion, sound pub lic fin ances and lim ited reg u la tion. Swiss Enforce ment’s Stärkle is adam ant Swiss man u fac tur ing will weather the latest upheaval. “There is something in the pride of Swiss industry to do it here, no mat ter what,” he says. Even as global trade frag ments, Bern recently con cluded talks to upgrade its free trade agree ment with China. The revised deal will allow 99.8 per cent of cur rent Swiss exports to enter China duty free, up from about half today. Brup bacher won ders how sus tain able the sub sidy race else where will prove. “Let’s see down the road in 10 years who is suc ceed ing,” he says. “Who has the money to con tinue to sub sid ise?” For Swiss man u fac tur ers, his answer is to remain indis pens able: make products and com pon ents that cus tom ers can not eas ily source else where. “For now, we are still indis pens able,” he says. “And we are in the busi ness of sur viv ing.