Switzerland warns its companies that no, they can’t dodge Trump’s tariffs by routing goods through the tiny neighboring country of Liechtenstein

·Tariffs and tradeEuropeSwitzerland warns its companies that no, they can’t dodge Trump’s tariffs by routing goods through the tiny neighboring country of LiechtensteinBy Sasha RogelbergBy Sasha RogelbergReporterSasha RogelbergReporterSasha Rogelberg is a reporter and former editorial fellow on the news desk at Fortune, covering retail and the intersection of and culture.SEE FULL BIO President of the Swiss Confederation Karin Keller-Sutter and Swiss Economy Minister Guy Parmelin met last week with U.S. officials to continue trade negotiations.DREW ANGERER/AFP—Getty ImagesSwitzerland and Liechtenstein have long d an economic market, but President Donald Trump has imposed a steep tariff on Swiss goods compared to its Liechtensteiner neighbors

The Swiss government has clarified that Swiss es will be unable to reroute their ducts through the neighboring principality

The Swiss government is telling its domestic companies that they have not, in fact, found a clever way to skirt President Donald Trump’s tariffs by routing goods through the tiny neighborhood country of Liechtenstein

But that agreement, which makes it nearly impossible to measure trade between the two closely linked countries, does not mean they are tariffed similarly

The Swiss State Secretariat for Economic Affairs (SECO) has said Swiss firms cannot pass off goods as Liechtensteiner by routing them through the principality because they would still be recognized as Swiss in origin. “Such circumvention via Liechtenstein is fundamentally impossible

The United States applies its non-preferential rules of origin when levying additional tariffs,” a SECO spokesperson told Fortune in a translated statement. “For a duct to be considered ‘Liechtenstein origin,’ it must either be entirely manufactured in Liechtenstein or [have] undergone sufficient cessing.” Liechtenstein head of government Brigitte Haas said last week there’s concern, though imbable, of Swiss companies looking to Liechtenstein for ways to dodge import taxes, but the risks are high. “There’s a fear that there might be some circumvention, but those are subject to a 40% tariff,” Haas said in an interview with Swiss outlet SRF. “I hardly think anyone would want to go through that.” Trump’s transshipment crackdown Last month, the White House imposed a 40% penalty tax on “transshipments,” or the movement of goods to an intermediate destination, meant to disincentivize this particular behavior

The Trump administration is aware that countries with lower recical tariff rates than its neighbors are incentivized to reroute their ducts, according to Robert Lawrence, Albert L

Williams fessor of International Trade and Investment at the Harvard Kennedy School

For years, China has used Mexico and Vietnam, among other countries, as transshipment bases prior to exporting goods to the U.S., according to a Brookings Institute report from June

These transshipments are having meaningful impacts: As China’s trade surplus with the U.S. decreases, it has been completely offset by the increase in its trade surplus with other trading partners, the report found

While the transshipment penalty was meant to address China, Lawrence told Fortune, it would apply to any country engaging in the behavior—despite some experts arguing the order lacks key details that would help enforce it. “It was really important with the response to China,” Lawrence said. “But there’s always this incentive to arbitrage between countries who are close to one another but have differentiated tariff treatment.” High stakes in Switzerland With Switzerland and the U.S. failing to come to a trade agreement before the Aug. 1 deadline, Swiss companies now fear Trump’s steep tariffs could roil domestic es, particularly in the industrial machinery, cheese, and chocolate industries

While Switzerland may rely on the U.S. as a key importer, the U.S. may be able to find suitable alternatives elsewhere, Lawrence said, putting the onus on Swiss companies to absorb the cost of tariffs in order to keep prices competitive in the U.S. market

Liechtenstein could wise suffer, according to head of government Haas, who said last week that although the principality has stopped trade negotiations with the U.S. and accepted the 15%, Switzerland’s economic health could waver and impact Liechtenstein, which counts Switzerland as its domestic market

Haas also said many Liechtensteiner ducts don’t list Liechtenstein as their certified place of origin, leaving uncertainty how explicit the U.S. was in outlining the recical tariffs for the principality

U.S. consumers could meanwhile begin to feel the impacts of these steep recical tariffs, responding differently to the alternatives available from other countries, should Swiss imports no longer be as readily available or affordable

For example, according to Lawrence, U.S. consumers may now buy more Cadbury chocolate from the UK—where tariffs sit at 10%—despite not finding the duct as appealing as Swiss chocolates, but because it’s theoretically cheaper and more abundant

But these ramifications are more than just chocolate. “There’s going to be a lot of inefficiency,” Lawrence said. “Americans are going to buy inferior ducts.” Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world

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