Stability above all else

Dear reader,

There is nothing companies fear more than instability and unpredictability. This is all the more true in a country like Switzerland which has a strong export industry and a small domestic market.

The recent changes in US tariff policy illustrate the point. Tariffs on Swiss goods were initially set at 31%, then raised to 39%, before dropping to 10% and now standing at 12.5%. It has been quite a rollercoaster ride. While the tariffs themselves are painful, many in the business community are relieved that the latest arrangement at least offers some (temporary) certainty for planning.

The same applies to the conflict involving Iran. Time and again, a swift peace settlement is promised, only to be followed by renewed missile attacks. This is problematic for the global economy and devastating for people in poorer countries.

The examples are endless

Behind this lies, first and foremost, the US president’s erratic behaviour, combined with a growing tendency towards isolationism alongside continued military interventions abroad. The role of the US on the international stage is becoming increasingly unclear.

Yet the US remains a driving force of the global economy. Its large domestic market and strong purchasing power are vital for Swiss companies, whose products are often expensive. And even as companies tap into new markets and Switzerland signs new agreements with other countries, the US is not going to disappear as a key market.

So what can be done? Victorinox, the maker of the iconic Swiss Army knife, offers one example. Its exports to the US plummeted from 20% to 13%. Like many Swiss firms, Victorinox has since claimed back customs duties after tariffs imposed by the Trump administration were ruled unconstitutional.

But Victorinox has ruled out moving production to the US, one of the stated goals of Washington’s tariff policy. The company’s reputation is built on its Swiss-made quality promise. The company has therefore announced its intention to tap into new markets, specifically in Asia and Latin America.

What is your connection to Switzerland? We’d like to get to know our newsletter readers better. That’s why we’ve launched a short survey. We’d be grateful if you could take a few minutes to complete it. Click here for the surveyExternal link.

And, as always, you can write to me at [e-mail]

Best regards,

Giannis Mavris

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Click here for our overview page on geopolitics.