With the abolishment of industrial tariffs as of January 2024, the Swiss Federal Council aims to tackle the high price level in Switzerland compared to its neighboring countries. By eliminating customs duties, imported goods are assumed to become cheaper for consumers and firms, with effects on prices for both intermediate and consumer goods.
This report documents the scope of this policy decision. The share of Swiss imports that are duty-free will increase by about 15 percentage points to 95% and about half of all current Swiss customs revenue will be eliminated.
Apparel stand out as a product group benefiting the most. With average tariffs of about 5% current import duties are relatively high compared to the import value. We show that especially low-value textiles stand to benefit because Swiss import duties are set on a weight basis. As a result, low-income households should benefit more than high-income ones.
The overall impact on consumer prices of the abolishment of tariffs will be small. We need to focus on specific products to find significant potential. But even for textiles, only the cost of goods sold (COGS) are reduced while other costs reflected in consumer prices are unaffected.