Swiss-US Tensions Rise as Bern Halts Arms Exports and Faces Trade Probes

Switzerland has abruptly slammed the brakes on new arms exports to the United States, a bold maneuver that asserts neutrality over alliance. As the conflict in Iran escalates following US and Israeli airstrikes that began on February 28, the Federal Council has invoked the War Materiel Act with uncompromising strictness. The government declared on Friday that authorizing military shipments to any nation involved in this international armed conflict is now impossible.

While existing licenses remain valid for the moment, the freeze on new authorizations is immediate and absolute. Defence Minister Martin Pfister projected calm authority, stating that the move should come as "no surprise" to the White House, asserting that "the US knows the maxims of Swiss foreign policy." However, this adherence to legal neutrality places Bern in a precarious position. A specialized expert group from the economics, foreign, and defence ministries has been tasked with a rigorous, ongoing review of all exports—including dual-use goods and training aircraft—to ensure no Swiss technology aids the war effort. The message from Bern is clear: even for its most powerful trading partner, Swiss law is not up for negotiation.

Almost simultaneously, Washington has launched a double-barreled regulatory assault on Swiss commerce. The Office of the US Trade Representative, led by Jamieson Greer, has formally notified Bern of two sweeping investigations under the formidable Section 301 of the Trade Act of 1974. These probes are not merely bureaucratic formalities; they are aggressive tools often used to justify punitive economic measures.

The first investigation targets "structural overcapacity," lumping Switzerland in with 15 other nations—including China and India—to determine if domestic policies are distorting US markets. The second probe is even more contentious, scrutinizing 60 economies for allegedly failing to block goods produced via forced labor. While the Swiss government has only just begun to analyze these letters, the timing is unmistakable. With the Federal Council discussing these threats on Friday without yet reaching a decision, the atmosphere in Bern is tense. The US is effectively putting the Swiss economic model on trial, demanding proof that its trading practices are neither "unreasonable nor discriminatory."

The economic stakes have arguably never been higher. Swiss exporters are already grappling with a punitive 10% additional tariff imposed by the US on February 24, a measure set to last for at least 150 days. This comes on the heels of a volatile period where tariffs under President Trump soared to a staggering 39% before being partially struck down by the US Supreme Court. The current goal is to negotiate a binding treaty that caps these duties at a maximum of 15%, but the path forward is fraught with obstacles.

Switzerland is playing a high-value card in these negotiations: investment. Swiss companies are pledging a massive $200 billion (CHF 158 billion) in direct investments into the US economy by 2028. This financial injection is a critical lever for Economics Minister Guy Parmelin as he attempts to de-escalate the trade war. However, with the new Section 301 investigations looming, the promise of billions in investment may not be enough to shield Swiss industries from further American protectionism.

The decision to halt arms exports has fractured political unity in Bern and raised alarming questions about national security. While the Social Democrats argue the ban is too lenient for not revoking existing licenses, the right-wing Swiss People's Party (SVP) views the government's hand as forced. However, the most chilling warning comes from the center. Reto Nause of the Centre Party cautions that this "premature" neutrality could severely compromise Switzerland's own defense capabilities.

The logic is brutal: if Switzerland refuses to supply the US, Washington may reciprocate. The Swiss Air Force is currently dependent on the delivery of F-35 fighter jets and Patriot missile defense systems—critical hardware for the country's protection. If the US decides to prioritize other allies or delay shipments in retaliation, the cost of neutrality could be measured in national vulnerability. As the expert group monitors the situation, the question remains: can Switzerland maintain its moral high ground without sacrificing its physical security?