The USD/CHF exchange rate remains under pressure this week as market participants focused on the new tariffs on most goods imported from Switzerland. It was trading at 0.8040, down by over 13% from its highest point this year.

US and Switzerland trade war

The main catalyst for the USD/CHF is the new tariffs on all goods coming from Switzerland. In a statement last week, Donald Trump said that most goods coming from Switzerland ports will be charged a 37% tariff.

At the same time, the US is considering more tariffs on imported medicines, which are an important part of the Swiss economy. 

The tariffs are kicking off after Swiss President Karin Keller-Sutter failed to reach an agreement after her visit to Washington this week. Instead of meeting with Trump and other trade officials, she met with Marco Rubio, the Secretary of State. 

The new tariffs on Swiss goods mean that a vibrant trade relationship is being put to the test. The two countries do trade worth over $188 billion a year, with goods being worth $88 billion. 

Data shows that US exports to Switzerland were worth $25 billion, while imports were $63 billion. However, the US has a bigger service surplus as it exports totalled $64 billion in 2024. 

Trump has justified tariffs on Switzerland to the country’s trade barriers and called it one-sided. The reality, however, is that Trump only looks at the trade deficit. Switzerland abolished all industrial tariffs since January last year. 

Swiss franc as a safe-haven

The main reason why the Swiss franc has jumped is that analysts and investors see it as a safe haven. Unlike the United States, Switzerland is not entangled in foreign wars and is often neutral on many issues. 

At the same time, Switzerland has a public debt o about $352 billion, which is about 37% of its GDP of $866 billion. The debt per capita is about $38,900.

In contrast, in the United States, the debt per capita is about $105,970, as the total debt has jumped to nearly $37 trillion. 

There are signs that the US economy is deteriorating. A report released last week showed that the US added just 73,000 jobs in July, the worst figure this year. Therefore, market participants anticipate that the Federal Reserve will cut interest rates in September.

USD/CHF technical analysis

USD/CHF chart | Source: TradingView

The daily chart shows that the USD to CHF exchange rate has been in a strong downtrend in the past few months. It recently topped at 0.9210, its highest point in September 2023, May 1, and January this year. 

The pair has moved below the key support at 0.8335, its lowest point in January last year. It remains below the 50-day and 200-day Exponential Moving Averages (EMA). 

Therefore, the USD/CHF exchange rate will continue falling as sellers target the support at 0.7873, the lowest level this year. A move below that level will point to more downside, potentially to the support at 0.7800.

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