Switzerland reaches tariff breakthrough in upgraded China trade deal

99.8% of current Swiss exports to China would eventually become duty free, giving Bern a major commercial result after two years of negotiations. Economy Minister Guy Parmelin and China’s commerce minister, Wang Wentao, announced the conclusion of talks in Bern on Thursday and signed a memorandum of understanding.

The agreement is expected to be signed formally later this year. It will then require approval by the Swiss Parliament before it can enter into force. Around three quarters of the new tariff exemptions would take effect immediately once implementation begins, according to the Swiss government.

The figures mark a substantial expansion from the existing arrangement. Switzerland became the first European country to conclude a free trade agreement with China, which has applied since 2014. That pact helped deepen commercial ties with Switzerland’s third largest trading partner, but it left many Swiss products facing duties.

Bern estimates that the upgraded terms could reduce Swiss exporters’ costs by about CHF 244 million annually. The agreement arrives as American tariffs and wider geopolitical uncertainty pressure governments and companies to reassess trade routes, market access and economic dependence.

Swiss watches, pharmaceuticals, cheese and coffee stand among the clearest potential beneficiaries, although the gains will arrive at different speeds. Swiss watches have received few tariff exemptions under the current deal, while pharmaceutical products have secured only partial relief. The revised agreement extends concessions to both sectors.

For watchmakers, lower border costs could improve pricing flexibility in a highly competitive Chinese market. Pharmaceutical companies would gain broader access for products that have so far faced incomplete tariff treatment. Food producers could also see improved conditions, particularly in cheese and coffee exports.

The agreement sets a longer timetable for sensitive agricultural products. Some cheese tariff reductions will be phased in over as long as 10 years, reflecting the political and commercial care surrounding food markets. That schedule limits the immediate effect for dairies and specialty producers, even as it gives them a clearer route to expanded access.

The tariff changes will not remove every obstacle facing exporters. Companies will still need to manage Chinese regulations, certification requirements, distribution networks and demand conditions. The financial benefit estimated by Bern will therefore vary by product, firm and speed of implementation.

Labour rights and environmental rules became part of the bargain, adding political weight to an agreement negotiated primarily to lower tariffs. Switzerland sought stronger provisions on forced labour and environmental protection during the talks.

The economics ministry said China agreed to implement International Labour Organization conventions and uphold fundamental labour rights. Bern described this as the first time China has accepted such provisions in one of its free trade agreements. The claim gives the revised pact importance beyond its customs schedules, although the practical value will depend on enforcement and monitoring after ratification.

The environmental chapter covers the transition to cleaner energy and the circular economy. Switzerland called it one of the most ambitious environmental chapters included by either country in a trade agreement. Those commitments could matter to Swiss companies that face growing pressure to document labour conditions, emissions and resource use across international supply chains.

The provisions also create a point of debate in Parliament. Earlier committee discussions were broadly favourable, but labour safeguards and environmental protections remained contentious. Lawmakers must weigh the commercial gains against questions about implementation, transparency and Switzerland’s ability to hold its partner to agreed standards.