Not only were a number of policy measures introduced in the Netherlands on January 1, but tax changes also came into force in Switzerland. The VAT rate has been increased, but what is most surprising, according to macroeconomist Edin Mujacik, is the fact that the import tax on all industrial goods has been abolished.
Whether it is machinery, raw materials or semi-finished products, import duties have been eliminated on all products, regardless of the source of the items. Switzerland no longer applies import duties for a number of reasons. Firstly, according to the Swiss government, keeping all the legislation together is very complicated. In addition, the aim is to make an additional contribution to the fight against inflation.
Why is it surprising that Switzerland chose to eliminate import duties?
It goes against the trend that is happening in the rest of the world. Every day we hear about protectionist measures and import duties that are actually being increased. This even happens on a large scale in the United States. It is striking, then, that Switzerland is taking this path.
What happens when you make foreign goods more expensive at your border?
The first impact in your country is the best, because there is additional work for all kinds of companies in your country. They can produce things cheaper. However, we have seen several times that dovish sentiment is on the rise and it initially provided good news. For example, the employment rate initially increases.
But eventually the shadow side takes over, so to speak. It makes production more expensive and leads to higher inflation, which leads to higher interest rates and lower economic growth. This is a lesson we have seen time and time again in the past, which is why it is strange to see the broad protectionist measures now being taken by the United States and the European Union.
What does it mean that Switzerland is moving away from this trend?
2024 will also be a year full of fragmentation and doing business with friendly countries. But it also means that you are no longer looking everywhere in the world where you can get something. The fact that Switzerland has chosen to do so indicates that, especially in the exceptional circumstances we face in the world, you as a country have to think more carefully about non-traditional options.
Switzerland says this is good for its companies. This is certainly the case, even if more competition arises. Competition is an important driver for companies to improve. So, it is ultimately very good news for the Swiss economy. So I think we can learn a lot from Switzerland; In the past, protectionist policies were not beneficial to anyone in the long run.
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