In a long rambling address at the World Economic Forum in Davos, Donald Trump praised Switzerland as “an incredible brilliant place”, before criticising it for running a trade surplus of $41bn with the United States. He argued that the country prospers thanks largely to American largesse, declaring that “They’re only good because of us”. He went on: “So they come in they sell their watches, no tariffs, no nothing, they walk away the make 41 billion dollars on just us”.
Mr Trump then turned his fire on Karin Keller-Sutter, the federal councillor who was Switzerland’s president when tariff negotiations with Washington began. Recounting their exchanges, he said: “And so the, I guess prime minister, I don’t think president, I think prime minister called, a woman, and she was very repetitive”. He quoted her objections to proposed tariffs: “She said no, no, no, you cannot do that 30%, you cannot do that, we are a small, small country. I said yeah but you have a big, big deficit”. He added: “No, no, no please you can not do it. Kept saying the same thing over and over”. Mr Trump concluded: “And she just rubbed me the wrong way, I’ll be honest with you”. As a result, he said, “And I made it 39%”. Later, he described Ms Keller-Sutter as “so aggressive”.
Mr Trump claimed that “Without the United States they wouldn’t be making anything” and said he had “realised the United States is keeping the whole world afloat”. “Without us it’s not Switzerland anymore”. He added that he could have applied harsher tariffs: “I could have said we want a 70% tariff and then we make money with Switzerland. But Switzerland would have probably been destroyed, financially destroyed, I don’t wanna do that”.
The speech then randomly veered away from trade to monetary policy. Mr Trump argued that “we should be paying the lowest interest rate of everybody”. He dismissed concerns about rising prices—”Oh no, inflation, inflation they’re going to raise interest rates”—before blaming central bankers, including Jerome Powell. “And they do, some of these stupid people like Powell, they raise interest rates. And what they do is they stop you from being successful”.
Mr Trump’s rambling disjointed discourse in Davos bears little resemblance to reality.
The US trade deficit with Switzerland
The $41bn deficit cited by Mr Trump roughly corresponds to the $38bn net deficit in goods trade recorded in 2024. Switzerland exported about $63bn of goods to the United States that year, while importing roughly $25bn in return.
But this tells only half the story. Trade in services runs strongly in America’s favour. In 2024 the United States sold an estimated $65bn of services to Switzerland, while Swiss firms exported only $35bn the other way. That leaves the US with a sizeable services surplus. Once goods and services are combined, the picture changes markedly. The overall American trade deficit with Switzerland narrows to around $8bn—a fraction of the headline figure on goods trade alone and far removed from the impression conveyed by focusing on goods alone.
These figures are relatively modest in macroeconomic terms for Switzerland, which generated GDP of around $940bn in 2024.
Central bank rates and inflation
Mr Trump seems to believe there is little or no connection between interest rates and inflation. In reality, interest rates and inflation are bound together by the price of credit and the tempo of economic activity. When inflation accelerates, central banks usually tighten policy, lifting rates to restrain demand: borrowing becomes costlier, spending and investment slow, and price pressures ease. When inflation undershoots its target, rates are typically lowered to revive activity. The relationship is not automatic—monetary policy works with a lag—but interest rates remain policymakers’ principal lever for keeping prices stable. The link between the two is well documented empirically. Cross-country studies using decades of data show that tighter monetary policy (higher interest rates principally) reliably reduces inflation.
In addition, central-bank policy rates do not translate one-for-one into market interest rates. Central banks set the anchor, but markets ultimately determine rates, particularly on longer term borrowing. If markets smell inflation, long term rates can rise regardless of where short term central bank rates are set. So even if “these stupid people like Powell” cut central-bank policy rates, it will not necessarily prevent the higher rates that “stop you from being successful”.
To many with a knowledge of the relevant figures and a grounding in economics and finance, Mr Trump will sound lost and confused.
In a recent New York Times poll, only 32% said that under Trump the US is generally better off now than it was a year ago. However, 73% of those identifying as republicans still appear to believe he remains competent.
More on this:
Trump’s speech – AP on YouTube (in English)
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