Independence Comes at a Price

Executive Summary

New geopolitical reality

The US has announced sweeping punitive tariffs of 39% on Swiss exports starting August 8, 2025 – impacting one-third of Switzerland’s export volume. This economically places Switzerland on par with unstable countries, resulting in a significant loss of reputation and competitiveness.

Economic impact

• Export prices effectively increase by up to 50% (tariffs + strong Swiss franc)

• Most affected: Industrial exports

• Since the pandemic, Switzerland has heavily relied on the US as a key market – leading to risk concentration

Pharma exempt – for now

Pharmaceutical exports are currently excluded, but:

• The US government signals political pressure through international price regulation

• This exemption may prove to be a tactical bargaining chip

Capital markets under pressure

The Swiss equity market shows structural weaknesses:

• Low tech exposure

• High weighting of pharma, consumer staples, and industrials

The SMI significantly lags behind global benchmarks

Strategic response: International diversification and thematic allocation

Capital allocation along strategic bottlenecks and macroeconomic levers:

• Artificial intelligence: Access to computing power, energy, talent

• Reindustrialization: Capacity building is supported by political policy

Health economics: Focus on efficiency and infrastructure rather than pharma innovation

smzh CIO recommendation

Portfolios with high Swiss exposure should be reassessed – geopolitically, by sector, and structurally. In addition to international diversification, a thematic approach offers access to future-oriented value creation that goes beyond national borders.

New rules in transatlantic trade

Geopolitical tensions are increasingly being reflected in economic policy. With the US administration’s announcement to impose punitive tariffs of 39 percent on selected Swiss exports starting August 8, 2025, Swiss companies and investors alike are under significant pressure to act.

While the EU was able to secure a tariff ceiling of 15% through a bilateral agreement, Switzerland lacks such protection. Combined with the Swiss franc’s appreciation of around 11% against the US dollar since the beginning of the year, affected goods now face an effective price increase of nearly 50% – an unprecedented burden for industrial exports.

Politically exposed: Switzerland in a new tariff category

The new tariff rate puts Switzerland in a category with countries like Myanmar, Syria, or Iraq – an unsettling signal given Switzerland’s stable economic environment. Even China is subject to a lower tariff rate of 34%. This is both economically difficult to justify and politically sensitive.

Industries with strong transatlantic ties are particularly affected, as they now face substantially higher border costs than their European competitors in the US market.

Concentration risk: The US as the main export narket

Since the pandemic, Switzerland’s export structure has shifted heavily toward the US:

• Almost 20% of exports went to the United States in 2024.

• The trade surplus with the US now equals nearly 5% of Switzerland’s GDP.

This shift compensated for weakness in Europe – especially Germany – but now creates an asymmetric geopolitical risk profile.

Who is affected?

The new US tariffs replace all previous regulations (including the 10% blanket tariff and "most favored nation" [MFN] rates). Approximately 37% of export volume is impacted, primarily from the industrial sector. Pharmaceutical products are currently exempt, although they account for nearly half of all exports.

However, these exemptions could be strategic: Already on July 31, leading pharmaceutical companies – including Swiss firms – were informed by the US Department of Commerce about potential new reference pricing regulations. Pressure on the pharmaceutical industry is increasing, both from a regulatory and a political standpoint.

Capital market: Structure becomes a weakness

a) Defensive quality, but lacking momentum

Switzerland continues to score with macroeconomic stability: low inflation, solid government finances, and effective institutions. However, the capital market lacks structural tailwinds:

• The SMI is heavily defensively weighted (pharma, consumer staples, industry).
• Relative performance since 2020 lags behind other markets.

b) Sectoral strain

• Consumer staples are grappling with saturated markets.
• Industrial exporters are suffering from tariff policy, investment hesitation, and currency headwinds.
• Pharma is increasingly in the spotlight of regulatory initiatives.

c) Underweight in sectors of the future

Switzerland is certainly connected to technology-driven and high-growth sectors through a dense network of start-ups, SMEs, and research centers, but this is hardly reflected in the public capital market structure. The main Swiss equity market, the SMI, remains structurally underrepresented in these sectors, which significantly impairs its ability to participate in global trends and structural transformations.

Strategic response: Thematic allocation

In a globally fragmented environment, traditional country allocation falls short. Capital now follows not only geopolitical stability, but also strategic connectivity.

Three exemplary areas of focus:

1. Artificial intelligence

It’s not applications that are investable, but bottlenecks: energy, computing power, semiconductors, and talent. Access to these resources has become the new allocation criterion.

2. Reindustrialization

Production capacity is now a geopolitical currency. States are promoting industrial resilience – investors benefit where governmental scarcity meets technological innovation.

3. Health economics

Demographics and systemic limits are shifting investments away from pharmaceutical products towards infrastructure, automation, and digital platforms. What matters is the contribution to increased efficiency, not product innovation.

Conclusion: Portfolios in the face of geopolitical realities

Switzerland remains a stable but strategically challenged location. Tariff policy, structural market distortions, and sectoral bottlenecks all call for a critical reassessment of domestic allocations.

Alongside global diversification, thematic allocation provides additional access to global value creation—across national borders and along strategic bottlenecks and real transformation processes.

Our recommendation: Swiss portfolios should be realigned with a focus on geopolitical resilience and thematic scalability. In-depth dialogue on the strategic starting position is essential for this.

Statement from Executive Management

“I am convinced: Switzerland has repeatedly demonstrated its ability to achieve extraordinary strength under pressure. Our independence – whether in currency, politics, or our tradition of neutrality – has always been central to our identity. Yet in an increasingly fragmented world, this independence also comes at a cost. The current tariffs make this very clear. There is still some time left for a resolution – even if our negotiating position does not currently appear particularly advantageous. For investors, this means the home market remains a cornerstone – but it must be approached with a new strategic mindset.”

– Gzim Hasani, CEO smzh ag