The 39% tariff in the United States does not apply to pharmaceuticals exported from Switzerland. Pharmaceuticals are Switzerland’s top export, accounting for about 40% of total export value, with 60% of these drugs going to the US. This tariff exemption is significant due to the importance of pharmaceuticals in Switzerland’s economy. Malaysia has also confirmed that its 19% tariff will not include pharmaceuticals and semiconductors. There has been no request or agreement from the US regarding Malaysian rare earth supplies during tariff discussions. Malaysia is the second-largest exporter of rare earth minerals to the US, following China, and it holds about 13% of the market, compared to the rest of the world’s 17%.

Trade Tensions Easing

Recent trade tensions seem to be calming down, reducing the risk of a major crisis. The VIX, which had been close to 20 in late July 2025, is expected to drop. Traders might benefit from selling volatility now that the exemptions for Switzerland and Malaysia have removed a lot of market uncertainty. The Swiss franc is likely to strengthen against the dollar. Since pharmaceuticals make up a large part of Swiss exports to the US, this tariff exemption offers significant economic relief. In late 2023, the CHF rallied sharply when trade fears were proven unfounded. Current trends suggest we may see a similar rise now. This news particularly reduces risks in the pharmaceutical sector, which has been underperforming. The Health Care Select Sector SPDR Fund (XLV) has lagged behind the S&P 500 by nearly 4% in 2025, and this could be the trigger for it to catch up. We anticipate increased activity in call options for major pharmaceutical and healthcare ETFs in the upcoming weeks.

Boost for Semiconductor Sector

The exemption for Malaysian semiconductors also supports the tech sector. The global chip supply chain, which experienced a sales drop per the latest June 2025 industry report, gains stability from this development. This news strengthens the case for investing in semiconductor ETFs like the SMH, as a major supply chain risk has been addressed. However, the situation with rare earths brings a different challenge. Malaysia’s statement about having no agreement with the US means the supply issue for minerals outside China is still unclear. This uncertainty reminds us of the price spikes in 2019, which could lead to volatility for miners, making options on an ETF like REMX an intriguing option for future developments. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now