Switzerland expressed concern on Tuesday about US President-elect Donald Trump's proposed tariff hikes and is evaluating potential responses if his administration implements them.

Trump plans to escalate his assertive trade policies from his first term, proposing a blanket 10% tariff on imported goods and even steeper duties on Chinese imports.

Experts warn that such tariffs could significantly impact Switzerland's export-driven economy, with the United States being its largest trading partner. Customs data reveals that about 20% of Swiss goods exports are destined for the US, making it a more critical market for Switzerland than Germany, China, or France, Reuters reports.

“Switzerland is concerned about Donald Trump’s announcement to impose additional tariffs on all goods imported into the US” a Swiss State Secretariat for Economic Affairs (SECO) spokesperson said on Tuesday. 

“Switzerland clearly rejects the plans,” they added regarding the proposals, saying that they go against the rules-based international trading system which is key to Switzerland’s economy.

SECO stated that Bern is exploring “sensible responses” and engaging in discussions with relevant US authorities, as well as officials in Germany, France, Italy, and the EU. 

While specific measures were not disclosed, SECO noted that Switzerland's options might be limited due to the elimination of all industrial tariffs earlier this year.

At present, the US imposes low single-digit tariffs on industrial goods, with many Swiss industrial exports entering the US duty-free.

While European experts and central bankers have highlighted the potential harm of increasing trade barriers, governments have remained cautious in formulating their responses to Trump’s proposed measures.

Economists estimate that Switzerland’s economic output could shrink by 1% if severe ripple effects, such as a trade war or corporate relocations to circumvent tariffs, were to occur.

Key sectors like pharmaceuticals, machinery, appliances, precision instruments, watches, and foodstuffs would be hit particularly hard by higher tariffs, according to economists from ETH Zurich.

Other nations have also raised concerns about the potential fallout from increased tariffs. Bundesbank President Joachim Nagel recently warned that Germany’s economy could see a 1% reduction in economic output under such circumstances.