Swiss Economy Faces Headwinds from US Tariffs as Markets Remain Cautious
Switzerland faces economic uncertainty with GDP growth slowing to just 0.1% in Q2 2025, down from 0.8% in Q1. New 39% US tariffs threaten up to 100,000 Swiss jobs, pressuring the export-dependent economy. The Swiss franc maintains safe-haven status amid global volatility, while businesses and investors adopt cautious approaches to navigate current challenges.
Switzerland's economic and business landscape is currently navigating a period of uncertainty, marked by sluggish GDP growth and the significant challenge of new US tariffs. While the Swiss market remains relatively stable, a sense of caution prevails among businesses and investors.
On the macroeconomic front, the latest figures from the State Secretariat for Economic Affairs (SECO) indicate a slowdown, with Gross Domestic Product (GDP) registering a modest 0.1% growth in the second quarter of 2025. This is a noticeable deceleration from the 0.8% expansion seen in the first three months of the year, with the industrial sector showing weakness while the services sector provided a degree of support.
A significant point of concern for the export-oriented Swiss economy is the recent imposition of a 39% tariff on Swiss goods by the United States. This protectionist measure is anticipated to exert considerable pressure on Swiss exporters, with estimates suggesting that as many as 100,000 jobs could be impacted. Swiss companies are reportedly actively seeking strategies to mitigate the effects of these new trade barriers.
In the financial markets, the Swiss Market Index (SMI) closed Monday, August 18th, on a flat note, shedding a marginal 0.02% to finish at 12,071.88 points. Over the past week, however, the index has managed a gain of 1.2%. Among individual company news, Swissquote Group Holding announced its first-half 2025 earnings on Monday, while analysts have been revising their forecasts for Swiss Re after the reinsurer surpassed expectations.
The Swiss Franc (CHF) continues to be influenced by its safe-haven status amidst global geopolitical and economic uncertainties. The EUR/CHF exchange rate has demonstrated relative stability throughout August, trading in a range between 0.927 and 0.943. Market analysts are forecasting a potential stabilization around the 0.93 level by the end of the month. Against the US Dollar, the franc was trading at approximately 0.8072 on Monday. The Swiss National Bank (SNB) has maintained its key interest rate at 0%, having made a cut in June 2025 as it continues to monitor the franc's valuation closely.
On the political and diplomatic front, a conference of Swiss diplomats is taking place in Bern this week to address pressing foreign policy challenges. A key topic on the agenda is the impact of the global geopolitical landscape on the Swiss economy. The conference includes a notable bilateral meeting between Swiss Federal Councillor Ignazio Cassis and the Italian Minister of Foreign Affairs, Antonio Tajani.
In domestic policy, discussions are ongoing regarding the potential abolition of the "valore locativo," or rental value tax, a move that proponents argue would bring greater fiscal fairness, particularly for families and retirees.
The tourism sector, meanwhile, is showing positive signs, with the number of overnight hotel stays in July expected to have seen an increase, partly attributed to the UEFA Women's Euro 2025 championship.
Looking ahead, the Swiss Medtech sector will be in focus today with a scheduled webinar on the state of the industry in 2025. Further developments are also anticipated from the ongoing diplomatic discussions in the capital.
