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Swiss leaders aim to improve tariff situation

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Unclear who they will meet in Trump administration

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Trump says he is concerned about trade deficit with

Switzerland

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Economists say tariffs would be a shock for Swiss economy

(Adds comments from U.S. President, others)

By John Revill

ZURICH, Aug 5 (Reuters) - Swiss President Karin

Keller-Sutter and Business Minister Guy Parmelin flew to

Washington on Tuesday, the government said, in a last-ditch

effort to avoid the 39% tariffs announced by President Donald

Trump on exports to the United States.

The U.S. tariffs, hiked from the initial 31% rate announced

in April, have sent Switzerland reeling after they were

announced on Friday.

The higher duty is due to take effect on Thursday.

During their visit, Keller-Sutter and Parmelin will

"facilitate meetings with the US authorities at short notice and

hold talks with a view to improving the tariff situation for

Switzerland", the government said.

It did not comment on which parts of the U.S. government

they would meet in Washington or whether a meeting was scheduled

with Trump.

A person familiar with the Trump administration's thinking,

said they were confident that a deal could be worked out with

Switzerland if it responded quickly with a better offer.

"There was some kind of bad interaction, but that can

blow over, if the Swiss come with a meaningful offer," the

source said, referring to a phone call between Trump and

Keller-Sutter on Thursday evening.

"It is a large trade deficit, especially in per capita

terms," the source added.

Trump referred to the conversation with Keller-Sutter in

an interview with CNBC on Tuesday, adding he was concerned about

the U.S. trade deficit with Switzerland.

"Look, I did something with Switzerland the other day,"

he said referring to his phone call with Keller-Sutter. "The

woman was nice, but she didn't want to listen, and they paid

essentially no tariffs," he told the broadcaster.

"And I said, we have a $41 billion deficit with you,

madam....and you want to pay 1% tariffs. I said, you're not

going to pay 1%, we lose, because I view deficit as loss."

EMERGENCY MEETING

The Swiss government held an emergency meeting on Monday to

decide its response to the tariff hike, and said it was ready to

make a "more attractive offer" to the United States.

It was also ready to pursue negotiations beyond the August 7

deadline.

Bern gave no details of what extra incentives could be

offered to secure a better deal, but it did say it was not

considering any countermeasures against the U.S.

Parmelin has previously said that Switzerland buying more

U.S liquefied natural gas (LNG) was under consideration, while

further investment by Switzerland in the United States could

also be an option.

The aim of Keller-Sutter and Parmelin's trip was to present

"a more attractive offer to the United States in a bid to lower

the level of reciprocal tariffs for Swiss exports, taking U.S.

concerns into account," the government said on Tuesday.

Some Swiss business leaders, including Nick Hayek, CEO of

watchmaker Swatch Group, had called on Keller-Sutter to

visit Washington to do a deal with Trump directly.

A trade barrier of 39% would be a major blow for the

export-orientated Swiss economy by reducing access to its

biggest overseas market for its watches, machinery and

chocolate, economists have warned.

Hans Gersbach, an economist at KOF Swiss Economic Institute

at ETH, a University in Zurich, said the Swiss delegation would

have to make a substantial offer to win a reprieve from the 39%

tariff, with the visit representing a last-ditch effort to

negotiate down the import duty.

"Something marginal won't be enough - it has to be a

significant number, which Trump can present to his supporters as

a victory for his negotiations," said Gersbach.

"It's crucial Keller-Sutter and Parmelin meet Trump and

speak with him directly. He is the decision-maker," added

Gersbach, who thought there was reasonable chance of success.

The Swiss government knew how serious the situation is, and

was putting all its efforts into getting a deal, he said.

"A 39% tariff on Switzerland, especially with the EU

agreeing a rate of 15%, would be an immediate shock to the Swiss

economy," said Gersbach.

(Writing by John Revill, additional reporting by Madeline

Chambers, Andrea Shalal and Bhargav Acharya, Editing by Miranda

Murray and Giles Elgood)