News
Switzerland was faced with a highly unwelcome surprise on its national holiday: Although the US, in a statement of intent dated July 1, 2025, had indicated a framework for negotiations with several trading partners, it unexpectedly announced a new US tariff rate of 39% on Swiss imports, surpassing even the 31% rate that was threatened in April.
Why were the tariffs increased from the originally threatened 31% to 39%?
In line with previous, often hard-to-explain policy moves under President Trump, this step also appears to lack transparency. Despite diplomatic talks and the technical framework agreement signed in July, Switzerland was classified by the US administration, according to an Executive Order of July 31, 2025, among a group of countries with particularly high trade deficits. This classification resulted in the tariff rate being raised to 39%.
At the same time, President Trump has given global pharmaceutical companies a 60-day deadline to lower drug prices for the US market. It is likely that these issues are now being deliberately linked in order to strengthen the US negotiating position.
What are the economic consequences for Switzerland?
The new tariffs would place a significant burden on the Swiss economy. Both globally, and especially in comparison to neighboring EU countries (15% US tariffs) or the UK (10% US tariffs), Swiss companies face a massive competitive disadvantage. Independent early estimates suggest a reduction in Swiss GDP of around 0.3% to 0.4%. The impact will be felt most by small and medium-sized industrial firms that produce in Switzerland and do not have substantial production facilities in the US. The depreciation of the USD versus the CHF by more than 11% since the beginning of the year further intensifies the situation, as it further reduces the price competitiveness of Swiss exports (a cumulative burden of up to 50%!). For globally diversified companies with US production sites and for the service sector, the impact is comparatively less severe.
How are financial markets reacting?
Global equity markets have already been in a mild correction or consolidation phase for the past five days, and this trend has intensified somewhat today. The Swiss stock exchange is closed due to the Swiss national holiday, so specific effects are likely to be seen at the beginning of next week. Smaller and mid-sized Swiss companies (such as those in the SMI Mid Index) are likely to be most affected. Major international equity markets are currently posting losses between 0.5% and 1.5%.
The Swiss franc remains relatively robust against both the USD and the EUR, with only marginal declines of about 0.5%. Yields on international financial markets are trending slightly higher—an expected response to the increased inflation risks caused by tariffs. Higher yields mean falling prices for bonds; thus, all major asset classes are currently impacted by these developments. The gold price has also declined slightly—a phenomenon not unusual as many investors take profits from gold holdings during correction phases. Such declines, however, can offer attractive entry opportunities for long-term gold investors.
What's next?
There is still hope for a solution, as the new tariffs are not set to take effect until August 7, 2025. This leaves a short window for further diplomatic negotiations.
What does this mean for my portfolio?
Despite the current turbulence, market losses remain moderate and should be viewed in the context of the recovery seen since the first “tariff shock” on April 2, 2025, when many markets rebounded significantly, some even reaching new highs.
Given elevated uncertainty, it is crucial for investors to maintain a calm and strategic approach and not give in to panic. Hasty reactions based on unclear situations can jeopardize long-term investment objectives. Therefore, it is advisable to remain committed to a carefully considered investment strategy that emphasizes diversification and aligns with individual financial goals. A disciplined approach enables more effective management of uncertain periods.
For investors concerned by the turmoil and/or those with equity holdings above their strategic allocation or with short-term risk concerns, partial sales may be considered.
Should I sell my Swiss equities?
No. As explained above, it remains advisable to adhere to a well-thought-out investment strategy that emphasizes diversification and aligns with individual financial objectives. If this applies, market corrections can also present attractive opportunities—particularly by optimizing the entry price of existing long-term positions.
Market volatility shifts focus to Swiss dividend stocks
Following the recent decision by the Swiss National Bank to cut rates to zero, Swiss investors face a familiar challenge: How can investors secure strong and stable returns in an environment where traditional savings products yield little or nothing?
Against this backdrop, dividend strategies are consolidating as a sustainable and attractive form of investment – especially for those whose risk profile allows for a higher equity allocation. This strategy can also benefit investors who want to deliberately focus their portfolios on income-generating assets. Dividend-paying equities provide a tangible source of income, which is largely missing from bank deposits and government bonds under the current monetary policy environment. This allows investors to generate steady cash flow while retaining the potential for capital growth. Additionally, in volatile markets, building portfolios oriented toward income-generating equities not only offers dividend income but can also help buffer against increased market swings.
