The US is close to making a trade deal with Switzerland, which is a positive step for nations that haven’t yet established agreements with the US. Reports indicate the deal could include a 15% tariff, which matches the EU rate and is significantly lower than the current 39%. However, this agreement is not finalized yet, and earlier talks have failed. A 15% tariff would create similar trade conditions to those between the US and EU. Swiss economic growth may continue to slow in the third and fourth quarters, but there’s cautious optimism for some small growth next year.

Negotiation Details

Negotiating with the US is complex. If Switzerland can get a deal without tariffs on certain sectors, especially pharmaceuticals, it would be beneficial. This outcome depends on the approval of the agreement, with uncertainties still present in the current US administration. A US-Switzerland trade deal could strengthen the Swiss franc. The currency has struggled to find its way recently, with September 2025 data showing a nearly 5% year-over-year drop in Swiss exports to the US. Lowering tariffs from 39% to 15% should help recover this, making bearish strategies, like buying put options on the USD/CHF pair, a sensible approach in the coming weeks. We expect a positive shift in the Swiss equity market, especially for companies focused on exports. The Swiss Market Index (SMI) has underperformed compared to other European indices this year, showing a modest 2% gain by November 2025, reflecting the ongoing trade uncertainties. A successful deal could spark a relief rally, making call options on the SMI a good way to take advantage of this potential growth.

Market Volatility

Volatility is another important factor to consider, as the outcome is still uncertain. The VSMI, or Swiss Volatility Index, is currently high at around 17, compared to its five-year average of 13, as traders are concerned about the possibility of talks failing again. If you believe a positive outcome is likely, selling volatility through options strategies could be rewarding, as a signed deal would likely cause the VSMI to drop sharply. However, it’s important to note that a similar breakthrough was anticipated last July before the talks fell through. The specific terms of the deal, especially regarding the critical pharmaceutical sector, will be crucial. Traders should manage risk carefully, as the market reaction will be significant depending on whether the news is positive or negative. Create your live VT Markets account and start trading now.

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