Executive Summary
The Swiss machinery, electrical, and metal industry recorded growth in orders and exports in the first quarter of 2026, driven primarily by global investments in data center infrastructure for artificial intelligence. However, the picture is mixed: while large corporations in energy and electrical engineering are benefiting, SMEs in classical mechanical engineering are suffering from a lack of investment. The main obstacles are geopolitical uncertainties, US tariff volatility, and EU protectionism – particularly harmful are planned steel tariff doublings by the EU from July 2026. The Swissmem association is calling on policymakers for planning certainty in trade agreements and energy supply.
Persons
- Martin Hirtzel (President Swissmem)
Topics
- Swiss machine industry
- Artificial intelligence & data centers
- Geopolitical risks
- Trade policy & tariffs
- EU protectionism
- Mercosur free trade agreement
Clarus Lead
The recovery of the Swiss export industry rests on a fragmented basis: while the AI infrastructure boom supports large corporations, simultaneously escalated tariff conflicts with the US and EU expose structural vulnerabilities. Critical for policymakers and investors is the upcoming EU tariff duplication on steel (50% from July 1), which could effectively drive the two Swiss steel mills out of the EU market – and is symptomatic of a new protectionist multilateralism that also affects industrial niche champions. Swissmem is simultaneously pressing for parliamentary approval of the Mercosur free trade agreement, which, despite farmer resistance, opens long-term growth opportunities.
Detailed Summary
Divided Cyclical Performance Under AI Driver
The first quarter of 2026 gave the industry an overall rating of "4 plus" – orders and sales increased, but the foundation remains narrow. The boom is concentrated in electrical engineering and power supply systems for globally established data centers, which provide infrastructure for AI services. This sector is supplied predominantly by large companies (switching technology, automation, emergency power solutions). Classical mechanical engineering, by contrast – the domain of SMEs and broadly networked supplier chains – is stagnating: investments have been lacking because uncertainties about business cycles, tariff rates, energy shortages, and geopolitical conflicts deter companies from committing millions to production capacity.
Trade Crisis as Structural Supply Problem
China's aggressive industrial policy and overcapacity have significantly dampened exports to Asia – a reverse development from the previous 20 years, when China acted as a growth engine, helping to quadruple exports. Exports to the United States are falling due to unclear tariff frameworks under the current US administration. EU exports are currently running well, but the planned doubling of steel tariffs from 25% to 50% from July 1, 2026 affects the two Swiss mills Swiss Steel and Stahl-Gerlafingen existentially: once duty-free import quotas are exhausted, customers would have to pay 50% penalty tariffs, which would effectively bring business to a standstill. Hirtzel argues this is counterproductive – Swiss specialty steel is green (from renewable energy), high-quality, and quantitatively homeopathic in the EU context; Switzerland is not responsible for Chinese dumping practices.
Free Trade as Strategic Countermeasure
The Mercosur free trade agreement (with Brazil, Argentina, Paraguay, Uruguay), which will soon come before the Swiss Parliament, offers new growth opportunities: Swiss machinery manufacturers can export solutions at Swiss wages and standards instead of producing locally. Farmers, however, are demanding 880 million francs in compensation, fearing cheap beef imports. Hirtzel emphasizes that quotas are contractually fixed and do not allow uncontrolled flow. Hirtzel calls criticism of the EU deforestation regulation "neocolonialist" – Brazil is a leader in climate protection (90% eco-electricity); forest protection and machinery export industries are decoupled.
Energy Supply and Iran Conflict as Risk Factor
A quarter of Swissmem member companies report supply chain problems due to the Iran conflict. Critical is gas dependency: one third of the energy mix comes from gas; if the Strait of Hormuz is blocked, there could be medium-term supply shortages. Currently, long-term supply contracts are protecting companies from price shocks – but these buffers will shrink.
Strategic Lesson: Niche Leadership and Political Safeguarding
Sources of hope for Hirtzel are the established niche world market leadership of Swiss companies (aerospace, semiconductors, energy infrastructure, defense, data centers). However, what is necessary is: (1) stable framework conditions (no cost increases), (2) secure energy supply, (3) no failure of free trade agreements, (4) permanent productivity increases. Policy must prevent Switzerland from being treated worse than EU competitors in tariff conflicts.
Key Messages
- AI Boom with Risks: Data center infrastructure drives order intake, but intensifies dependence on individual sectors; classical mechanical engineering stagnates.
- Protectionism Escalates: EU steel tariff doubling and US tariff uncertainty endanger export niches; Mercosur agreement as necessary way out.
- Supply Chains Fragile: Iran conflict, gas supply via Hormuz, and lack of planning certainty force SMEs into defensive investment strategies.
Critical Questions
Data Quality: How representative are the Q1 2026 figures for the annual trend? Can Swissmem prove that AI data center demand is sustainable or is this a cyclical investment peak?
Conflict of Interest – Tariff Refund Claims: Hirtzel reports a 20% payout rate for US tariff refund claims, but cannot say whether this is industry average. Are large corporations (with legal teams) systematically benefiting better than SMEs in the refund process?
Causality – EU Protectionism: Hirtzel argues that Swiss steel is not responsible for Chinese overcapacity. Verifiable: What proportion of actual EU steel imports come from China versus Switzerland? Is the tariff doubling statistically justified or aimed at the wrong target?
Mercosur Deforestation: Hirtzel rejects the EU deforestation regulation as neocolonialist. But: How does the Switzerland-Mercosur agreement verify actual compliance with forest protection goals? Can Brazil make it transparent without external control mechanisms that imported beef does not come from illegally deforested areas?
Energy Risk – Scenario: If Strait of Hormuz blockade continues and gas prices rise 50–100%, which Swiss companies face existential threat first? Are there emergency diversification plans or emergency energy reserves?
Niche Strategy – Realism: Are Swiss SMEs actually able to continuously compete in highly specialized niches, or does this pressure lead to consolidation requirements and relocation of operations?
Free Trade Agreement – Farmer Compensation: The demanded 880 million francs for farmer compensation – from which budget should these come? Does the general public/industry then effectively subsidize farmers while both benefit from Mercosur?
Planning Certainty Paradox: Hirtzel says companies are accustomed to volatility. But then: What is concretely the political performance promise that Swissmem demands? Is "no foolish mistakes with free trade agreements" operationalizable or just an appeal?
Sources
Primary Source: [SRF Tagesgespräch: Swiss Machine Industry Q1 2026 – Interview with Martin Hirtzel, President Swissmem] – https://download-media.srf.ch/world/audio/Tagesgespraech_radio/2026/05/Tagesgespraech_radio_AUDI20260529_NR_0021_e0a4b55ef6354b58a1d892d770b452ab.mp3
Verification Status: ✓ 2026-05-29
This text was created with the support of an AI model. Editorial responsibility: clarus.news | Fact-checking: 2026-05-29