Switzerland’s Gold Export Surge Highlights Its US Trade Dilemma

(Bloomberg) — Swiss gold exports to the US surged last month to the highest since March, underscoring the trade imbalance that prompted President Donald Trump to slap a 39% tariff on imports from the country.

Shipments of bullion from Switzerland, the world’s biggest gold-refining hub, to America jumped to almost 51 tons in July, from less than 0.3 tons the previous month. This year’s peak was recorded in January, when 193 tons of Swiss gold was shipped to the US.

Record bullion exports worth more than $36 billion made up more than two-thirds of the small European nation’s trade surplus with the US in the first quarter, even though Swiss refiners capture only a little portion of the value of the commerce. Billions of dollars worth of gold is constantly flowing across its borders, from mines in South America and Africa to banks in London and New York.

The impact of the gold industry on Switzerland’s trade balance is more important than ever as the Trump administration focuses on leveling deficits. The US president’s decision to impose tariffs of 39% on Swiss imports has caused a shock in the country, with the government having previously been confident it would avoid heavy duties.

Large-scale exports to the US earlier this year came largely in response to a potentially lucrative trans-Atlantic arbitrage window caused by concerns the precious metal could get caught up in sweeping import duties. Switzerland’s gold refiners became a crucial node in the opportunity, as European traders delivering bullion to New York needed their metal recast from the 400-ounce bars standard in London — the largest gold trading venue — into the 1 kilo or 100oz bars required by the US-based Comex exchange.

That flow reversed in the second quarter after bullion was exempted from Trump’s tariffs, leading US prices to fall back in line with the benchmark spot price in London. Earlier this month, a federal ruling that gold bars will be subject to tariffs caused chaos in global bullion markets, before Trump weighed in to say the precious metal would not face a US levy.

The Swiss National Bank addressed the issue earlier this year in a paper, arguing that outsized gold exports to the US shouldn’t be included when analyzing the trade relationship between the two economies.

–With assistance from Jack Ryan.

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