The impact of geopolitics on Swiss businesses

The “America First” challenge

The Trump administration’s America First policy presents a significant challenge for Switzerland’s export-driven economy. As the United States is Switzerland’s most important export market, US import tariffs are severely impacting the Alpine nation. The recently implemented 39% tariff on most Swiss exports to the US constitutes a major blow for Swiss companies. Moreover, it is possible that the US government will impose additional tariffs on Switzerland in the coming months to bolster domestic production, including on pharmaceuticals.

Beyond these direct tariffs, Swiss businesses must also consider the broader potential repercussions of US trade protectionism. A slowdown in global economic growth could reduce demand for Swiss goods in key markets such as China. Additionally, as many Swiss companies are integrated into European supply chains, any decline in production in EU countries due to US tariffs could also affect the Swiss economy. Uncertainty surrounding US trade policy is prompting companies to delay investment decisions, which could further hinder economic growth in Switzerland and beyond.

However, the America First policy also presents opportunities for Swiss companies. Those with production facilities in the United States, for example, could benefit from an anticipated reduction in the tax and regulatory burdens.

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Established Swiss foreign policy under pressure

Rising geopolitical rivalries are reshaping the foreign policy priorities of many countries and altering the path of globalization. This shift will affect the markets from which companies source raw materials and products as well as the markets in which they can invest and sell.

The growing rivalry between the United States and China presents both risks and opportunities for the Swiss economy. The Trump administration has signaled a willingness to take aggressive steps to reduce the dependence of the US economy and that of its partners on China. Switzerland maintains strong trade relations with both countries and has pursued a relatively open foreign policy toward China. This creates diplomatic tensions with the United States. The recent US decision to exclude Switzerland from the group of trusted nations permitted unlimited access to AI chips underscores Washington’s growing unease with Bern’s stance on China. At the same time, as the United States seeks to reduce its dependence on Chinese imports for strategic goods, some Swiss sectors, such as the pharmaceutical industry may benefit from increased demand in the United States – especially if they are prepared to scale up their domestic production within the US market.¹

In addition, Europe’s security architecture is changing in response to Russia’s revisionist policy, coupled with uncertainty about the United States’ commitment to guarantee European security in the future. Despite its neutrality, Switzerland recognizes the urgency of strengthening its defense capabilities and exploring deeper security cooperation with other European partners. This creates growth opportunities for Swiss defense contractors and adjacent industries. However, Switzerland’s strict regulations on arms exports² are currently limiting its ability to benefit from the large-scale defense build-up in other European countries.

A geostrategy strengthens resilience in uncertain times

In this complex and highly volatile global environment, Swiss companies must consider developing and implementing a geostrategy. The increased magnitude of geopolitical risks presents both challenges and opportunities for globally operating companies. To effectively manage these challenges and identify opportunities, companies need to assess the impact of political risks on their business operations.

Simply acknowledging the existence of political risks is no longer sufficient. Managers need to measure the impact these risks may have on the company’s activities to better anticipate and prepare for potential challenges. To stay resilient and competitive in times of geopolitical complexity, companies must analyze and evaluate political risks comprehensively across all functions and reflect them in their corporate strategy.