New details have emerged concerning the contentious phone call between former US President Donald Trump and former Swiss President Karin Keller-Sutter on July 31st, which led to a 39% tariff imposition on Swiss imports. According to "SonntagsBlick," the call was not initiated by Keller-Sutter but by US Trade Representative Jamieson Greer, whom the paper described as "Switzerland's secret observer within the US government." Sensing a negative turn for Bern, Greer informed Swiss Economics Minister Guy Parmelin, advising him to urgently contact Washington.

During the exchange, Trump reportedly showed disdain for his own negotiators, stating "I don't care about them!" when the Swiss President reminded him of the agreement between Washington and Bern. Furthermore, Trump directly demanded financial counter-performances from Switzerland, asking, "What are you paying me?" and comparing the EU's $600 billion investments to a "gift." These thirty-four minutes of conversation nullified months of diplomatic efforts and resulted in unprecedented tariff hikes, causing significant concern within Swiss economic circles heavily reliant on US exports.

Market Signals

Sector Impacts and Opportunities: Swiss pharmaceuticals and technology sectors, accounting for over 38% of exports to the US, face significant risk. A potential 250% tariff on pharmaceuticals could lead to a substantial GDP contraction in Switzerland. Luxury goods industries like watches, chocolate, and machinery are also affected.
Price Movements and Volatility: Tariffs imposed on gold bars (1-kilogram and 100-ounce) imported from Switzerland have caused volatility in the precious metals market.
Competitor Positioning Changes: While Switzerland faces high tariffs, other nations like those in the EU and the UK have negotiated lower rates, indicating a tiered approach by the US administration based on diplomatic outcomes and trade concessions.

Winners & Losers

Winners: US domestic industries, particularly in steel, aluminum, and automotive sectors. Companies in countries with lower or no tariffs on similar goods may gain a competitive advantage over Swiss exporters in the US market. Losers: Swiss exporters, especially in pharmaceuticals, technology, luxury goods, and gold refining, face significant economic hardship. Swiss consumers may face higher prices for imported goods. Global supply chains are experiencing disruptions and uncertainty.

Action Timeline

Immediate (24-48h): Swiss companies should assess the impact of tariffs on their current contracts and identify any opportunities for renegotiation or repricing.
Short-term (1-2 weeks): Accelerate efforts to diversify export markets. Begin restructuring supply chains and consider direct investment in US operations to circumvent tariffs.
Long-term: Re-evaluate Swiss foreign policy and economic strategies to adapt to an era of increasing protectionism. Monitor Swiss diplomatic efforts to resolve the trade dispute by October.

Risk Assessment

Regulatory Risks: The unpredictable nature of US tariff policy and the potential for further, unannounced changes pose significant regulatory risk.
Market Volatility: Uncertainty surrounding the resolution of the trade dispute contributes to increased market volatility in financial markets, exchange rates (USD/CHF), and commodity prices (gold).
Geopolitical Tensions: The tariff dispute exacerbates broader geopolitical tensions and protectionist trends globally, creating an unstable international trade environment.

Key Indicators

What these tariffs signal for the market/industry: These tariffs reflect a shift towards more protectionist trade policies and the use of tariffs as a diplomatic tool.
Leading indicators and data points: Watch for the evolution of US tariff policies, including potential exemptions or negotiations with other countries.

Regional Perspective

This call exposed the vulnerability of Switzerland's "splendid isolation" strategy, forcing a re-evaluation of its approach to global trade in an era of protectionism. It highlights the urgent need to adapt to a rapidly changing global trade environment.

Immediate Implications

What happens next: The Swiss government is preparing to actively pursue a negotiated solution, with hopes for a resolution by October.
Time-sensitive opportunities or risks: Swiss companies must immediately evaluate current export contracts and determine if renegotiation or price adjustments are needed to pass on or absorb tariffs.

What to Watch

Leading indicators to monitor: Watch for any further announcements or adjustments to US tariff policies.
Expected next developments: Closely monitor Swiss diplomatic efforts.
Key decision points ahead: Observe the responses of Swiss companies, including investment strategies and production shifts.

These events indicate that US trade decisions under the Trump administration were highly personalized and superseded pre-negotiated agreements. Trump's willingness to disregard his own negotiators and override existing protocols to push the "America First" agenda represents a serious shift in the approach to trade negotiations. For Switzerland, the historical reliance on stability and mutual agreements has been severely tested, necessitating a more agile and proactive strategy in its international trade relations.