US midterms: Democrats ease risk of new tariffs on Switzerland

The US midterm elections have given the Democrats a majority in both chambers of Congress. For Swiss exporting companies, the news is potentially favourable: the risk of new tariff hikes is reduced.

With control of the House and the Senate, the Democrats will be able to curb Donald Trump's trade initiatives and increase pressure on his tariff agenda. According to the bank J. Safra Sarasin, this opens the possibility of an easing on tariffs, particularly toward allied countries, a category that includes Switzerland.

The uncertainty is not over

Swiss companies should not, however, expect a rapid dismantling of tariffs already in place. Trump still holds veto power over Congress and can keep acting by decree in various areas. For export-oriented businesses, this means continuing to live with an unstable trade framework, one that is difficult to plan around when calculating margins and investments over the medium term.

The new balance of power in Washington is likely to have repercussions on financial markets as well. Congress plays a decisive role over US public spending, a factor that can affect the yields on US government bonds and, in turn, the cost of US public debt.

According to the bank Lombard Odier, the question of how the new political balance will affect the dollar remains open. A possible depreciation of the US currency would weigh further on Swiss exports, already affected by tariffs, making Swiss products less competitive on the American market. A weaker dollar, on the other hand, would lower the cost of travel and purchases in the United States for people departing from Switzerland.

For Swiss companies dependent on the American market, the banks' message therefore remains cautious: the risk of a worsening situation is lower, but there is no certainty about when, or how much, tariff pressure will actually ease.