The United States and Switzerland have agreed on a deal that will significantly reduce the tariffs imposed earlier this year by US President Donald Trump.

The framework trade agreement was announced on Friday following talks in Washington this week with Swiss Economy Minister Guy Parmelin.

The deal will reduce the US tariffs on Swiss imports from 39% to 15%, while Switzerland has pledged to invest $200 billion (€172 billion) in the US.

US Trade Representative Jamieson Greer said the "massive" Swiss investment will help cut the US deficit in pharmaceuticals and help generate thousands of jobs across the country.

Parmelin, meanwhile, said the agreement, which affects around 40% of Swiss exports, "puts Switzerland on an equal footing with the European Union."

Why were Switzerland and the US holding trade talks?

In August, Trump had imposed a 39% import duty on Swiss imports, which was the highest tariff among developed countries.

Switzerland feared the steep duties would cause major damage to its trade ties with the US, which is one of the Alpine nation's most important trading partners.

The high tariffs had threatened the export-reliant Swiss economy, which is known for pharmaceuticals, watchmaking, industrial machinery, chocolate and cheese, among others.

What did the US and Switzerland agree to?

Under the agreement announced on Friday, the White House will cut the tariffs to 15%, in line with the duty imposed on the European Union.

Greer told CBS that Switzerland would send pharmaceuticals, gold smelting and railway equipment to the US.

In a statement, the Swiss government said companies from Switzerland "intend to make $200 billion in direct investments" in the US by the end of 2028.

The White House said those investments in US production would go towards medical devices, aerospace and gold manufacturing.

The White House also said it is hoped that a full trade deal can be concluded next year.

Trump lowers duties on beef, coffee, fruit

The agreement with Switzerland was announced on the same day that Trump lowered tariffs on a range of agricultural imports, including beef, coffee, tomatoes and bananas.

The order comes with the Trump administration facing increasing pressure at home due to the rising cost of living.

Recent elections in New York, New Jersey and Virginia, in which Democrats all won, the cost of living crisis was a key issue for voters.

Trump's order means those products will be exempt from his so-called "reciprocal" tariffs that he imposed on most of the world's countries this year.

Edited by: Dmytro Hubenko