The Swiss franc is down 0.3% against the U.S. dollar today as pressure mounts from an unexpected increase in American tariffs.
Selling pressure on the franc initially surged on Friday following a sudden escalation in trade negotiations between Switzerland and the United States. Media reports indicated that the tariff hike — from 31% to 39% — followed an “unproductive” phone call between U.S. President Donald Trump and Swiss President Karin Keller-Sutter. Swiss press officers stated that there was no major quarrel between the leaders, though securing a better agreement before August 7 appeared unlikely.
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Create account Try a demo Download mobile app Download mobile appAccording to Bloomberg Economics estimates, Switzerland’s export-reliant economy could lose up to 1% of GDP as a result of the record-high tariffs — not to mention the potentially harsher impact of future duties on pharmaceuticals (Switzerland is home to giants like Novartis and Roche). The increased risk of an economic slowdown could trigger a correction in the franc, particularly in the short term.
However, depreciation of the franc could be welcomed from a Swiss perspective. The franc’s recent appreciation has made Swiss products significantly more expensive globally, while falling import prices have become a major source of deflationary pressure within the country. With interest rates already at 0%, continued deflation may force the Swiss National Bank (SNB) to introduce negative rates later in 2025.
On the other hand, the tariff hike might turn out to be yet another case of "TACO" (Trump Always Chickens Out) — especially since Switzerland is the 5th largest import partner of the U.S., and many Swiss goods lack obvious substitutes. Swiss authorities have just announced they will pursue a deal and have no plans for retaliatory measures.
The USD/CHF pair erased some of its earlier losses following a weak U.S. NFP report, but renewed concerns over tariffs and deflationary pressure once again played against the franc. Source: xStation5
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