(CN) - All it took was a 34-minute telephone call with U.S. President Donald Trump to throw Switzerland into an existential crisis.

It was July 31, 2025, only hours before Trump was set to make his sweeping global tariffs official.

Across Switzerland, preparations were underway to celebrate the country's Aug. 1 national holiday, marking the founding of the Swiss confederacy in 1291 A.D.

At 8:10 p.m. Swiss time, Trump got on the phone with Swiss President Karin Keller-Sutter to talk about tariffs. Reportedly, U.S. officials asked for the phone call.

Swiss officials were feeling confident they'd already reached a deal with the White House to keep tariffs on Swiss goods in the range of 15%, a level Trump had forced the European Union into accepting only days before.

But the ensuing 34-minute phone call, Swiss media reported later, went off the rails after Keller-Sutter, a 61-year-old Liberal politician and pedagogist by training, apparently tried to correct Trump when he mentioned America's trade deficit with Switzerland.

Trump then demanded Switzerland offer America financial sweeteners or face hefty tariffs, according to Swiss officials who provided details about the conversation to the SonntagsBlick newspaper.

"They pay me 600 billion, what do you pay me?" Trump reportedly said to Keller-Sutter, referring to his deal with the EU, which promised to spend $600 billion on U.S. military goods.

The next day, Switzerland went black with despair after it learned Trump was slapping Switzerland with 39% tariffs - among the highest in the world and the highest for any developed economy. The rate was based on Switzerland's $41 billion surplus in goods in 2024 with the U.S. 

"This decision by Trump was a major psychological blow for the Swiss," said Rene Schwok, a politics professor at the University of Geneva. "Swiss are not used to these types of attacks."

Indeed, ever since the Alpine nation was the scene of invasion and battles during the Napoleonic Wars, Switzerland has stayed above the fray and out of the wars raging across the plains of Europe.

Over this long period of peace, the Swiss were busy perfecting their picturesque towns, breathtaking landscapes and high-quality crafts, including watches, cheeses, chocolates, precision tools, jewelry, gold bars and elaborate bank vaults.

Switzerland is, in many ways, the envy of the world: Economic, political and social calamities are rare and it's long ranked among the richest countries per capita in the world.

Its fabulous wealth stems largely from the oodles of fortunes stored in its secretive banks and from demand for its highly prized products. Switzerland is home to world-famous brands: Among them, Rolex and Omega watches, Victorinox knives, Chopard jewelry, Lindt chocolates, Nestle drinks, Roche drugs.

With about 18% of its exports going to the U.S., the Trump shock cast Switzerland into unfamiliar crisis territory and unleashed a wave of panic, anger and hurt.

Overnight, Swiss confidence crashed to the ground - the country's habitual sense of superiority dashed.

"They were arguing, debating, wondering," Schwok said, speaking by phone. "It was like a psychodrama."

"Switzerland has always thought it had good relations with the U.S., therefore being singled out is a shock to the identity of Switzerland," said Hans Gersbach, the co-director of the KOF Swiss Economic Institute at the ETH Zurich university. "It's a deeper shock beyond economics."

In the media, the blow was described as a fiasco and even as Switzerland's worst defeat since 1515, when its forces suffered a stinging loss to the French at the Battle of Marignano.

Keller-Sutter came in for the harshest blame. She was accused of not being obsequious enough toward Trump and badly miscalculating her approach.

Suggestions were floated about how to massage Trump's ego, perhaps by enlisting former Swiss tennis star Roger Federer and Swiss-born FIFA President Gianni Infantino, a Trump friend, on a charm offensive.

Meanwhile, Swiss companies issued warnings about steep losses, worker layoffs and the need to move operations to the U.S. or the EU to avoid tariffs. Precision instrument makers dependent on U.S. sales worried they might not survive.

In reality, the economic damage may not be as bad as many feared, with pharmaceutical and gold exports exempted from the tariffs, at least for now.

Gersbach estimated the tariffs might eat up between 0.3% and 0.6% of Switzerland's gross domestic product and lead to between 7,500 and 15,000 job losses over the long term.

But Gersbach said things could get much worse if Trump carries through with a threat to impose tariffs on pharmaceutical products unless drugmakers lower their U.S. prices. Switzerland exported about $35.5 billion in pharmaceutical goods to the U.S. in 2024.

However, there's also a chance Switzerland could emerge relatively unscathed. 

One possibility is for the U.S. Supreme Court to uphold an appellate court's recent 7-4 ruling that found Trump's tariffs illegal. Alternatively, Switzerland may offer enough financial goodies to convince Trump to lower the tariffs.

Regardless, the past month has left Switzerland questioning core principles: Its political independence and neutrality in armed conflicts.

"Twenty years ago it was easier for a small country to be accepted and recognized as a neutral country in the world," said Oscar Mazzoleni, a political scientist at the University of Lausanne. "Today, it's much more difficult."

Mostly, that's because global politics have become increasingly defined by unpredictable superpower rivalry where the U.S., China, Russia, the EU and other powers are locked in conflict.

For example, after Russia invaded Ukraine in February 2022, the U.S. and the EU pressured Bern to adopt financial sanctions against Russia. To avoid hurting Swiss firms and banks, Switzerland agreed. Moscow, in turn, denounced Switzerland as betraying its neutral status.

Global instability has forced Switzerland into a contentious debate over how best to position itself for the future.

There are those who want Switzerland to double-down on independence while others favor even greater alignment with the EU. Switzerland already has more than 100 bilateral deals with Brussels and adopted about 70% of EU laws, Mazzoleni said, speaking by phone.

This debate was hanging over Swiss politics even before Trump's tariffs shock.

Last year, Bern and Brussels approved a wide-ranging agreement to draw closer. But the package still must go through the Swiss Parliament and win approval in a referendum, a process that could take two years or more. The country is split on the matter, though the tariffs jolt likely has bolstered the pro-EU camp.

Regardless, Switzerland isn't about to give up its neutrality any time soon and join the EU or NATO, experts said.

"As all countries, the Swiss consider themselves to be exceptional," Schwok said. "But sometimes, I think the Swiss consider themselves even more exceptional than others. A feeling that we do better than the others: 'Look at what's happening in Italy, in France, in Germany.'"

Courthouse News reporter Cain Burdeau is based in the European Union.

Source: Courthouse News Service