Workshop Germany, Vise Switzerland: When China Thinks, Berlin Assembles – and Bern Gets the Bill

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clarus.news | Analysis | May 20, 2026

In Handelsblatt, Thomas Sigmund warns of an industrial policy division of labor where China innovates and Germany only manufactures. "Engineered in China, assembled in Germany" – this formula packs a punch. It describes not only Germany's dilemma but also explains why the friendly cooperation between Federal President Guy Parmelin and Chancellor Friedrich Merz in Berlin on May 19, 2026, brings little benefit to Switzerland: Those who become a workshop themselves can no longer free their neighbors from the tariff vise. Switzerland stands between the EU, China, and the USA – and is being ground down between these three grindstones.

The Sigmund Diagnosis: Germany Loses the Scepter

What Thomas Sigmund describes in Handelsblatt on May 19, 2026, is more than an internal VW question. It's the admission of an industrial policy defeat. Volkswagen is considering assembling Chinese-developed electric cars in German plants. Supporters argue with jobs and "value creation on site." Sigmund dissects the argument with surgical precision: In the modern automotive industry, margins no longer lie in turning screws on the assembly line, but in software architecture, battery chemistry, and data management. Those who only assemble what others have designed are not value creators, but contract manufacturers.

The land of engineers becomes the land of screwdrivers. And Sigmund's second finding is even more uncomfortable: "Technology transfer through observation" is a myth. Those who assemble Chinese platforms learn assembly – not innovation. Reverse engineering is faster. The claim that German engineers would somehow become smarter through contact with Chinese designs is the industrial policy variant of "it'll work out somehow."

This is no footnote for Switzerland. It's the strategic prerequisite for every question currently being asked in Bern about relations with Berlin.

Berlin, May 19, 2026: Friendly Words, Empty Hands

Parmelin's visit to Berlin produced the expected images. Trade volume grew by 8.6 percent in 2025. Germany is Switzerland's most important economic partner, Switzerland is Germany's seventh most important address. Both countries call for "more European responsibility in security," Parmelin refers to the OSCE chairmanship. Beautiful sentences, all true, all inconsequential.

Because the decisive question arose on the same day in Brussels, not Berlin: The EU excludes Switzerland from its new steel tariff agreements – in the middle of negotiations on Bilaterals III. Berlin signals "goodwill," as do Rome and Paris. What Switzerland actually needs, however, are not benevolent capitals, but binding rules. It doesn't have those. NZZ colleague Christina Neuhaus asked the uncomfortable question last week about how wise it is for the EU Commission to exclude Switzerland from the steel tariff agreements "in the middle of discussions about new contracts and despite promised solutions." Justified – and answers itself: Brussels can afford it because Switzerland has no institutional leverage.

This was exactly the finding of our analysis on the broken modus vivendi: Parmelin's justified criticism of the breach of contract is – read liberally – not an argument against Bilaterals III, but for it. A modus vivendi without arbitration procedures offers exactly the protection Switzerland is currently experiencing in the steel dispute: none.

Between Three Empires: The Geometry of the Tariff Vise

The steel question is not an isolated case, but a symptom. Brussels has declared its steel production a "strategic necessity" – although the EU globally produces only 7 percent of steel, China 54 percent, all of Asia 74 percent. The security rhetoric is market protection with a helmet. For Switzerland, this results in an uncomfortable mechanism:

First, the US Section 232 logic – triggered by Trump's proclamation of April 2, 2026, and the new assessment basis on full tariff value – systematically excludes third countries like Switzerland.

Second, Brussels reacts with its own protective measures and doesn't take Switzerland along – despite a free trade agreement existing. Politically-economically, this is a classic coordination problem in the Commission: The Directorate-General for Trade responds to Washington, the Directorate-General for Competition defends the internal market, the political top body doesn't coordinate sufficiently with the signed standstill agreement. Result: Switzerland falls through the cracks.

Third, in Germany – by far Switzerland's most important trading partner – the problem Sigmund describes emerges in parallel. An industrially weakened neighbor that itself operates between China's innovation and American tariff pressure cannot be the advocate that gets Switzerland out of the vise.

Berlin assembles, Beijing thinks, Washington and Brussels impose tariffs. And Switzerland? Hopes for goodwill in capitals that themselves have none left.

Three Proposals for Discussion

Those who are smaller need smarter levers. Three strategies currently under-discussed in Federal Bern:

1. Structurally: Ratify Bilaterals III – and actively use arbitration procedures

The liberal narrative that an institutional agreement is a "foretaste" of loss of sovereignty is politically dead after the steel case. The opposite is true: Only a binding arbitration procedure would have allowed Switzerland to take contractual action against exclusion from the steel tariff agreements – instead of begging for goodwill in Berlin. Those who reject Bilaterals III implicitly accept that Brussels will continue to sort out Switzerland by administrative act. That's not sovereignty, that's its caricature.

2. Industrial policy: Protect Swiss value creation before it becomes a workshop

What Sigmund describes for Germany applies doubly to Switzerland: In pharma, precision industry, MedTech, and FinTech, margins lie in research and IP, not in physical production. Switzerland finally needs an honest industrial policy doctrine: no sell-off of strategic R&D capacities in cooperations where intellectual property flows away; a binding IP clause in every research agreement with Chinese partners; and – as the Andrey-Salzmann coup of December 2025 showed – cross-departmental open source strategies for digital infrastructure. Those who don't control software and data don't control their economy.

3. Geoeconomically: Reactivate EFTA and broaden alliances beyond the EU

Switzerland is too small to negotiate with the EU alone and too important to rely on bilateral goodwill. The structural answer lies in a serious revival of EFTA as a negotiating bloc – with Norway, Iceland, and Liechtenstein as institutional reinforcement – combined with active diversification: deepened agreements with the United Kingdom after Brexit, Mercosur, ASEAN, India. Not as a replacement for the EU, but as a corrective. Those who have three market options negotiate differently than those who have only one.

Conclusion: The Self-Deception of Capital Diplomacy

Swiss foreign economic policy of recent years has a blind spot: it confuses goodwill in capitals with protection in contracts. Berlin means well. Paris means well. Rome means well. Brussels doesn't care. And Washington means business coldly. The result is steel tariffs, exclusion from agreements, and a 10-million state struggling for attention between three empires.

Sigmund has asked a question for Germany that is even more urgent for Switzerland: What remains of one's own economic power when others control innovation, regulation, and tariff architecture? The answer is not "more bilateral meetings." It is: arbitration procedures instead of goodwill, IP control instead of platform romanticism, alliances instead of appendage.

Berlin assembles. Beijing thinks. Brussels collects. The question is whether Bern finally begins to calculate.

Critical Questions

  1. Evidence: What quantitative evidence exists for the thesis that margins in the automotive industry have actually shifted from hardware to software – and can this shift also be empirically proven for other Swiss export industries (pharma, MedTech, mechanical engineering)?
  2. Conflicts of interest: Whose interests does EU security rhetoric in the steel sector actually protect – European supply security or the structurally weak European steel industry? Who benefits from Swiss exclusion?
  3. Causality: Is the Swiss negotiation dilemma primarily a result of EU policy, US tariff architecture, or homemade institutional weakness – and which factor would be most correctable?
  4. Feasibility: Are the three proposed strategies – Bilaterals III with arbitration procedures, industrial policy IP doctrine, EFTA reactivation – politically viable, or do they fail due to the same domestic political constellations that already sunk the institutional framework agreement in 2021?
  5. Alternatives: Are there realistic scenarios in which Switzerland permanently secures market access without institutional connection to the EU – or is the choice actually only between arbitration procedures and bilateral supplication?
  6. Risks: What are the concrete side effects of EFTA reactivation – does it additionally weaken the negotiating position vis-à-vis Brussels, or does it actually create countervailing power?
  7. Historical analogy: Can today's industrial policy constellation be compared with earlier phases of deindustrialization (textiles 1980s, steel 1990s), or is software dominance in the value creation mix a qualitatively new phenomenon?

This article is based on the Handelsblatt commentary by Thomas Sigmund ("China's Workshop – From the Land of Engineers to a Manufacturing Location", May 19, 2026), the NZZ commentary by Peter A. Fischer ("Damocles Sword 10-Million-Switzerland", May 20, 2026), the Federal Council's press release on Parmelin's visit to Merz (news.admin.ch, May 19, 2026), the email exchange between clarus.news and NZZ (Christina Neuhaus, Fabian Schäfer) of May 17/18, 2026, as well as the previous clarus.news analysis on the broken modus vivendi.

Sources:

Tags: #SteelTariffs #BilateralsIII #Workshop #China #Germany #EU #USA #Section232 #EFTA #IndustrialPolicy #DigitalSovereignty #Parmelin #Merz

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