Switzerland said on Monday it was ready to make a better offer to the United States to avoid steep tariffs that have shocked the country.
The Alpine nation faces a 39-percent duty, one of the highest among the dozens of economies that will be hit by new tariffs that are expected to come into force from Thursday.
The Swiss stock market tumbled by more than two percent when it opened on Monday before paring its losses later in the day. It was closed for a national holiday when Trump unveiled the tariffs on Friday.
Trump had originally threatened in April to slap a 31-percent tariff on Switzerland, which swiftly decided to negotiate with the United States.
By comparison, the 27-nation European Union struck its own deal with Trump and will face tariffs of 15 percent, down from a previous threat of 30 percent.
Swiss President Karin Keller-Sutter has said Trump believes that Switzerland "steals" from the United States by enjoying a trade surplus of 40 billion Swiss francs ($50 billion).
The Swiss Federal Council said after an emerging meeting on Monday that it would "continue negotiations with the aim of reaching a trade deal", even beyond the Thursday deadline.
"Switzerland enters this new phase ready to present a more attractive offer, taking US concerns into account and seeking to ease the current tariff situation," the council said in a statement.
It said the looming tariff put the country "at a distinct disadvantage compared with other trading partners with similar economic profiles", citing lower duties for the EU, Britain and Japan.
US Trade Representative Jamieson Greer, however, warned on Sunday that "the coming days" were not likely to see changes in any duties as the "tariff rates are pretty much set".
Hans Gersbach, deputy head of the KOF Swiss Economic Institute, said the tariffs could cut the country's annual growth by between 0.3 and 0.6 percent.
But it could be as much as 0.7 percent if the pharmaceutical industry, which has so far been exempt from tariffs, is targeted by Trump.
Pharmaceutical products account for more than half of Swiss exports, the economist noted.
Analysts at Swiss investment managers Vontobel said in a note they believed "there is some hope for an agreement on US tariffs for Switzerland" that would bring them down to the 15 percent set for other countries
However, they added, if the 39-percent tariffs remain in place, earnings for key sectors such as watchmakers "could be hit substantially".
The chocolate industry association, Chocosuisse, said the tariffs were a "tough blow" for the sector, which is already reeling from a 10-percent duty.
"It is particularly shocking that Switzerland finds itself at a distinct disadvantage compared to all other Western industrialized countries," it said in a statement, urging the government to continue negotiating.
Swiss media said the government could point to distortions in the gold trade during the negotiations as it inflates the country's trade surplus with the United States.
Switzerland is home to refineries where imported gold bars — mostly from Britain — are melted down to meet US standards.
These gold transactions create a statistical distortion in trade figures, according to the Sunday newspaper SonntagsZeitung, which suggests pointing out that they give the impression Switzerland exports more to the US than it actually does.
by Nathalie OLOF-ORS