Chocolate, Watches… and Tariffs: Switzerland in the Spotlight

From luxury watches to world-famous chocolate, Switzerland’s exports have long symbolised quality. But now, they’re also caught in the crosshairs of Washington’s 39% tariffs. What does this mean for markets, growth, and investors?

This year’s Swiss National Day came with an unexpected development: Washington raised tariffs on Swiss imports to 39%, a steep increase from the 31% in April and far above the initial 10% baseline during the negotiation period.

Unlike many countries that secured reduced levies, Switzerland is now one of the hardest hit by the Trump administration’s trade policies.

📉 Market reaction has been swift:

• The MSCI Switzerland Index initially fell 15% before stabilising.

• The USD/CHF weakened nearly 13% as investors sought the Swiss franc’s safe-haven qualities.

• Exemptions for pharmaceuticals, semiconductors, precious metals, and certain consumer electronics (representing nearly 70% of Swiss exports) helped temper the blow.

  
  

⚙️ Sectors most exposed: watches, machinery, precision instruments, engineering, chemicals, textiles, and automotive components.

📊 Economic outlook:

• SECO projects Swiss GDP growth of just 1.2% in 2025, with risks of a further slowdown if tariffs broaden.

• However, the impact is expected to remain digestible, with resilience supported by Switzerland’s strong positioning in high-value industries.

• Longer-term risks lie in potential US moves against pharmaceuticals, where tariffs of up to 250% have been hinted.

  
  

🌍 The bigger picture:

• Switzerland remains a major investor in the US economy, with US$352bn in FDI, supporting around 400,000 jobs and leading all foreign players in R&D spending.

• Once gold is excluded, Switzerland’s trade surplus with the US looks far more modest than headlines suggest.

  
  

🔮 Our view: 

While these tariffs create short-term headwinds, exemptions in strategic sectors provide relief. We expect negotiations to eventually settle around 15–20% tariffs, bringing Switzerland’s treatment closer to EU levels. Investors should brace for slower but steady growth, with resilience from core industries.

At Intrasia Wealth, we continue to monitor global trade developments and their implications for portfolios, ensuring our clients remain positioned to navigate volatility while seizing opportunities in resilient markets.