The Swiss stockmarket remains unfazed

The Swiss government has returned empty-handed from its impromptu visit to Washington, and tariffs are now in effect. However, the Swiss index is resisting, remaining stable, with the country's growth hardly affected by the situation.

Customs tariffs are here to stay, but there is still room for negotiation in the near term. Switzerland's trade surplus with the US is structural, but has rarely been as high as in 2024. Half of it comes from pharmaceutical exports, and gold sales have recently surged, a classic phenomenon in times of tension.

Donald Trump has already exempted gold from tariffs. This means that 21% of Swiss exports to the US are now completely tariff-free.

It remains to be seen what is really irritating Washington.

The opening of foreign markets to US products, which is important to Washington in these negotiations, is not an issue here because Switzerland abolished all industrial tariffs on January 1, 2024: 99.3% of US exports enter the country tax-free.

The pharmaceutical industry, which represents 48% of exports to the United States, seems to be at the heart of the dispute. Reuters has announced meetings this week between the heads of Novartis, Roche, and the Swiss government to find solutions.

Despite fears of a decline in the SMI, the media and political turmoil has not affected the markets.

First, let's put things into perspective. While the index has remained calm, an analysis of its composition provides some explanations. Stocks unaffected by the tariffs, such as Holcim, Partners Group and Swiss Life, have risen significantly. These gains offset the more pronounced declines in stocks exposed to the North American market, such as Amrize.

The index's resilience is also due to the fact that a large proportion of listed companies manufacture directly in the US or Europe, reducing the rate to 15%, or a discount of around 24% compared with total exposure. In addition, Swiss exports are based on high value-added products with low price elasticity, meaning that for a large part of the index, demand falls less than average when prices rise.

Although this is a blow to the Swiss economy, and more so for small companies than large caps, it should be able to hold its own. Economists have barely revised their growth forecasts. The economy is expected to grow by 1.4% this year, which is more than the eurozone.