(Bloomberg) — Swiss stock investors are bracing for Monday\u2019s market reopening after US President Donald Trump slapped a punitive 39% export tariff on the country, among the highest in the world.<\/p>\n
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Trump\u2019s tariff rollout landed on a holiday, Swiss National Day, which means any market fallout will only be felt once trading resumes on Monday. While Trump\u2019s fresh tariff salvo left baseline rates unchanged for many of the US\u2019s trading partners, some like Canada and Switzerland got hit with significantly higher duties.<\/p>\n
Switzerland, known for its luxury watches, rich chocolates and banking giants, is one of the US\u2019s biggest trade partners. Last year, it exported more than $60 billion of goods to the US, ranging from pharmaceuticals and medical devices to Nespresso coffee. So the 39% tariff rate is likely to roil the market Monday even if some investors cling to the hope that it\u2019s just another one of Trump\u2019s negotiating ploys.<\/p>\n
\u201cClearly, the Swiss market\u2019s first reaction will be negative,\u201d said Andreas Wosol, head of Amundi SA\u2019s European equity value strategies. \u201cBut then attention turns to negotiations. This is an announcement where Trump wants a reaction rather than to impose this level of tariff.\u201d<\/p>\n
On Friday, several US-listed Swiss stocks fell. Shares of the country\u2019s biggest bank UBS Group AG slid 1.8% and computer hardware maker Logitech International SA dropped 3.5%. American depositary receipts for Compagnie Financi\u00e8re Richemont SA \u2014 owner of luxury maisons like Cartier, Chlo\u00e9 and Van Cleef & Arpels \u2014 fell 2.5%. And Watches of Switzerland Group Plc slumped 6.8% in London trading.<\/p>\n
What stings more is that Switzerland\u2019s European Union counterparts were able to secure a 15% tariff rate. That creates a \u201ccompetitive disadvantage\u201d for the Swiss, according to a Friday note from authors including Daniel Kalt at UBS Global Wealth Management\u2019s Chief Investment Office.<\/p>\n
Last year, the US accounted for a 19% chunk of Switzerland\u2019s goods exports, the authors point out. Their base case is for the two countries to reach a similar tariff deal to the EU. But even then, they say a 15% tariff rate is still sizable compared to before \u201cLiberation Day,\u201d while the US dollar\u2019s depreciation against the Swiss franc makes matters worse for Swiss exporters.<\/p>\n
For Holger Schmieding, chief economist at Germany\u2019s Berenberg, it\u2019s all a prelude to negotiations.<\/p>\n
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\u201cIt will be a big shock to the Swiss market initially, but this rate is so high it\u2019s more of a strategy to start serious negotiations rather than a final rate, which is likely to be much closer to the EU,\u201d he said.<\/p>\n
Meanwhile, pharmaceutical heavyweights like Novartis AG and Roche Holding AG are facing additional pressure after Trump sent letters to 17 drugmakers last week, demanding lower prices. US and European peers initially dipped on the news.<\/p>\n
\u201cOn top of the tariff strategy now comes a full-scale assault on the pricing of branded drugs sold in the US,\u201d wrote Arthur Jurus, Oddo BHF\u2019s head of investment office Switzerland. \u201cTrump is applying unprecedented pressure on drug prices, directly targeting Swiss pharmaceutical giants.\u201d<\/p>\n
The Swiss Market Index has trailed the Stoxx 600 this year, partly because of its heavy exposure to defensive versus cyclical stocks. On Monday, the Swiss index could see a delayed reaction to its European peers, after the Stoxx 600 slumped 1.9% Friday for its worst day since April, while France\u2019s CAC 40, Germany\u2019s DAX and Italy\u2019s FTSE MIB fell over 2.5%.<\/p>\n
\u201cIt\u2019s hard to tell whether this is the final say \u2014 or it\u2019s a negotiation tactic,\u201d said Ipek Ozkardeskaya, senior analyst at Swissquote Group Holdings. \u201cSuch tariffs will add additional pressure on Swiss exporters and cause further divergence of the SMI index from major peers.\u201d<\/p>\n
Here\u2019s what other market participants are saying:<\/p>\n
Andrea Gabellone, head of global equities at KBC Global Securities<\/p>\n
\u201cThis is hitting practically their core sectors \u2014 pharma, watches, chocolate, food. All those have already been hit by skyrocketing raw materials price and now this. So all the stars look misaligned for Swiss companies. The problem is they have a 39% tariff and on top of it, we have to see what happens to the pharma sector which is one of the top three in terms of Swiss exports.\u201d<\/p>\n
Chris Beauchamp, chief market analyst at IG<\/p>\n
\u201cThe high levels on Swiss imports mean investors will continue to sell first and ask questions later. No doubt the Swiss will be high-tailing it to Washington for a deal that should bring the level down, but for now the index faces a tough time indeed.\u201d<\/p>\n
Ozge Brinkworth, healthcare analyst at Rathbones Investment Management, on the drug-pricing request<\/p>\n
\u201cThe scope of the proposals is reasonably narrow, covering Medicaid products, which make up single digit percentage of sales for most major pharma companies, and new launches. Its implementation is also not straightforward, there has already been pushback from the Congress on Medicaid prices, and the US government\u2019s ability to influence drug prices in other countries is likely to be limited. Nevertheless these points do not prevent the continued threat of pricing reform from hurting the sentiment even more for the pharma and life sciences sectors.\u201d<\/p>\n
–With assistance from Sagarika Jaisinghani, Julien Ponthus, Sujata Rao and Subrat Patnaik.<\/p>\n
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\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Swiss stock investors are bracing for Monday\u2019s market reopening after US President Donald Trump slapped a…\n","protected":false},"author":2,"featured_media":42569,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[4536,45,49,48,1376,30316,30315,100,30314,30317,834,16139,30319,30318],"class_list":["post-42568","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-bloomberg","tag-business","tag-ca","tag-canada","tag-donald-trump","tag-export-tariff","tag-logitech-international-sa","tag-markets","tag-swiss-national-day","tag-swiss-stock-investors","tag-switzerland","tag-tariff-rate","tag-trading-partners","tag-watches-of-switzerland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/42568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=42568"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/42568\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/42569"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=42568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=42568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=42568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}