Markets appear to be increasingly indifferent to tariff announcements. Brill explains that the frequency of trade policy shifts under President Donald Trump has led to habituation. “The first time someone stirs up dust it is an event; the tenth time not so much,” he says. While the current market reaction remains muted, the longer-term impact is likely to be more significant. Brill expects that tariffs will eventually show up in US consumer prices, affecting purchasing power and demand. “We will also see the negative effects of tariffs, for example, in the form of rising US consumer prices,” he says.
The US has imposed a 15% surcharge on most goods imports under its latest wave of trade deals, concluding months of uncertainty with key trading partners. However, some countries — notably Canada, India, Brazil and Switzerland — have been left without an agreement, exposing their exports to much steeper tariffs. For Switzerland, the US set the import tariff at 39%, higher than initially threatened. Dr Felix Brill, CIO at VP Bank, notes the country’s disappointment, especially given the contrast with better outcomes secured by others. While the Swiss stock market has not yet reacted strongly, Brill attributes this to the exemption granted to the vital pharmaceutical sector.
“Only around 30% of exports to the US are affected, though, as the important pharmaceutical sector has been spared for the time being,” he says. Even so, uncertainty remains. “There is a threat of a US market intervention here too,” Brill adds, pointing to Washington’s new focus on targeting specific industries.
