The White House announced that Switzerland has chosen not to lower trade barriers with the United States. This decision puts a stop to any efforts for a more balanced trade relationship between the two countries. Switzerland’s position could affect future trade talks with the U.S., which prioritizes fair agreements where both sides benefit.

Current Trade Policies and Relations

The current trade policies are putting strain on U.S.-Switzerland relations. The U.S. remains committed to seeking fair terms to improve trading conditions. The failure of trade negotiations could put pressure on the Swiss Franc. We can expect the U.S. government to consider retaliatory actions that may weaken the CHF against the dollar. In 2024, over 16% of Switzerland’s total exports went to the U.S., posing a significant economic risk. Investors might want to consider short positions on the Swiss Market Index (SMI) using futures or buying put options. Companies like Novartis and Roche, which reported that more than a third of their revenue comes from the U.S. market, may be particularly affected. Their stocks are good candidates for bearish options strategies in the coming weeks. Market anxiety is likely to rise, creating chances for volatility. The Swiss Volatility Index (VSMI), which had been stable near its 12-month low of 13, has already risen to 17 following this news. Buying calls on the VSMI or similar volatility products could yield profits during this uncertain time.

Prolonged Trade Disputes and Market Instability

This situation is reminiscent of the long U.S.-China trade battles in the late 2010s. In hindsight from 2025, we can see how those early tariff announcements led to months of market volatility. We should prepare for a similar period of instability ahead, rather than thinking this is just a one-day event. For currency traders, this is a good time to explore FX options. The USD/CHF exchange rate, which has been stable around 0.9100 for the last three months, is likely to rise. Buying USD call options against the CHF is a low-risk strategy to take advantage of the anticipated movement toward the 0.9400-0.9500 range, which we last saw in early 2024. Create your live VT Markets account and start trading now.

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