*

Switzerland threatened by higher US tariffs than EU

*

Swiss recently agreed major trade overhaul with EU

*

Dollar weakness vs franc also hurting Swiss exporters

By Dave Graham

ZURICH, July 3 (Reuters) - Switzerland is exploring what

concessions it can make to secure a deal with Washington on

trade, but it must tread carefully to protect its interests with

key trading partner, the European Union, politicians and people

familiar with the matter said.

The Swiss cabinet last month approved its biggest trade

policy overhaul in years with the EU, two months after the U.S.

stunned Switzerland by announcing 31% tariffs - well above the

20% rate Washington set out for the 27-nation bloc.

That shock prompted a scramble by business leaders and

officials to underline how much Switzerland invests in the

United States and the tariff threat was suspended for a 90-day

period ending July 9. Talks are continuing.

Nicolas Walder, a Greens member of the lower house of

parliament's foreign policy committee, said Switzerland must

insist on its commitment to multilateralism with the U.S.

"A deal should not interfere with any agreement that

Switzerland has signed or wants to sign, and should specifically

mention the bilateral agreement with the EU," said Walder, whose

committee is regularly briefed on the trade talks.

The Swiss mandate for negotiating with the U.S. stipulates

that relations with its other trade partners be upheld. Any U.S.

deal must be compatible with Switzerland's future relations with

the EU, a Swiss source familiar with the matter said.

Swiss officials and lawmakers believe that a 31% tariff can

be averted, but say U.S. President Donald Trump's existing 10%

baseline tariff looks likely to stay.

"Switzerland is negotiating in good faith with the U.S.

government, aiming for a positive outcome," the Swiss Economy

Ministry said in a statement in response to questions on the

points made by Reuters in this article.

The EU trade agreement faces a lengthy approval process and

is almost certain to be put to a national referendum under

Switzerland's system of direct democracy.

CONCESSIONS

Trump's unpredictable approach to trade policy has been a

challenge for Switzerland, which abolished its own industrial

tariffs last year and sets great store by adherence to rules.

Eager to offer Trump something, Switzerland is exploring

granting concessions to the U.S., such as greater market access

for produce like seafood and citrus fruits, the source said.

Home to pharmaceutical giants Roche and Novartis - both big

U.S. investors - Switzerland also knows Washington has been

investigating trade practices in the sector and does not want

any deal to be muddied later by pharma tariffs, the source said.

"This is absolutely crucial," said Simon Michel, a federal

lawmaker and CEO of medical technology company Ypsomed.

Jean-Philippe Kohl, deputy director of industry association

Swissmem, said even if only a 10% tariff applies, the dollar's

decline against the Swiss franc amid the trade uncertainty was

already making exporters' goods dearer in the U.S.

And if the EU secured better tariff terms with Washington,

that could put Swiss firms at a disadvantage.

"It's therefore important that the dialogue with the U.S.

quickly lead to a positive outcome," he said.