Swiss firms are keeping a watchful eye on the possible trade policies of both candidates in the United States presidential election campaign – especially the unpredictable Donald Trump.
During his campaign, Trump has talked of massively raising trade tariffs for both China and Mexico and of vetoing international trade deals.
“Business can deal with anything except uncertainty. I worry that if Donald Trump gets to the White House it would create uncertainty that could affect the dollar, stocks and bonds,” Martin Naville, chief executive of the Swiss-American Chamber of Commerce (AmCham), said at a recent event.
While Congress and the US courts will play a role in checking the power of the next President, the White House could unilaterally decide to opt out of trade deals – or in more extreme circumstances, such as a state of war or emergency, impose more restrictive trade embargoes.
TPP and TTIP
This is a cause for concern for Swiss business as both candidates have expressed serious doubts about free trade deals. These reservations have centered on the proposed Trans-Pacific Partnership (TPP) that focusses on the Pacific Rim. But observers fear the anti-free trade rhetoric may also spell the end for Transatlantic Trade and Investment Partnership (TTIP) negotiations between the US and the European Union – to which Switzerland hopes to attach itself.
“The US political system is very stable, with proper checks and balances, until it comes to trade deals. The President can cancel TTIP, TPP or any other trade deal without needing Congress approval. If the US does not ratify TPP then it will lose business credibility and credibility in Asia,” said Naville.
“Swiss business is reliant on global trade deals that enshrine the values that we stand for: protection for consumers, for employees, intellectual property, investments and the environment. Chinese-led treaties would fill the vacuum of a failed TPP, and they would miss out most of the rules that we believe in.”
However, the US is not the only threat to global trade, according to Tina Fordham, senior global political analyst at US bank Citigroup, who was also speaking at Thursday’s AmCham event in Zurich.
“Future Swiss trade prospects are not confined to the US election,” she told the assembled business leaders. “Upcoming elections in France and Germany and a growing popular reaction against income inequality and immigration are also big events.”
“There is some opposition to TTIP on the European side as well. The US is not acting in a vacuum.”
Notwithstanding the potential negative impact to free trade, which would have a knock-on effect in Switzerland, AmCham is confident that Swiss companies will continue to thrive in the US whoever wins the presidential election on November 8.
In a press release, AmCham pointed to the steady rise of Swiss exports to the US, which it said have risen 40.5% in the last five years as exports to the EU have fallen -3.6%.
“There are only some minor details in the programs of the electoral campaigns that might negatively affect the business of Swiss companies in the USA,” the statement read. “And with their great experience and flexibility, Swiss companies will most certainly overcome these challenges more successfully than their competitors.”
Swiss trade to the US has comfortably outperformed global trade in the last 18 months.
For 2015 as a whole, exports to the US rose 6% (global -2.6%) to CHF27.4 billion. Imports rose 6.8% to CHF11.7 billion (-6.8% worldwide).
The trend has continued in the first eight months of this year. Exports to the US have gained 17% on the same period in 2015 and imports 27.6%. By comparison, global exports rose 4.7% and imports 4.8%.