The verdict is in for Swiss trade for August, which includes the first full month of 39 percent tariffs imposed by the US. Exports fell 8.3 percent year-on-year, the biggest contraction since 8.7 percent in September 2024, and the fourth consecutive decline. Switzerland imported 6.4 percent less in August than the comparable year-ago period. The result was a trade surplus of 4.009 billion Swiss Francs on exports of 18.930 billion and imports of 14.921, billion.

Exports to the US fell as seasonally adjusted 22.1 percent in August, while imports fell 0.4 percent from July. The trade surplus contracted to 2.056 billion Francs in August from 2.925 billion in July. The main factor for the decline was a 22.1 percent drop in chemical and pharmaceutical exports to the US, falling to 873 million Swiss Francs to their lowest level since the end of 2020.

Watch exports fell 8.6 percent in August from the previous month in which they gained 10.3 percent after a 4.6 percent increase in June. This bellwether industry could suffer mightily should tariffs continue.

After businesses were stockpiling products in the months before tariffs took hold in August, today's data show that the day of reckoning has come. The Swiss National Bank meets next Thursday, after which they will announce their rate decision which will most likely be a cut, taking the benchmark rate into negative territory once again. It will be interesting to note if the SNB comments on tariffs, but even a new era of lower rates won't be enough to help some of Switzerland's major industries. Absent a trade deal, the best hope for the time being is the US Supreme Court upholding an appeals court ruling that the majority of tariffs are illegal.

Until then the clock, and watches, are ticking.

The merchandise trade balance measures the difference between the total value of Swiss merchandise exports and imports. The focus is on the balance of trade in goods, excluding precious metals, gemstones, works of art and antiques. This is provided in unadjusted and seasonally adjusted measures for cash and volume.

Changes in the level of imports and exports along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the Swiss franc in the foreign exchange market. Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products such as chocolate and watches, more than half of Swiss exports are in mechanical and electrical engineering and chemicals today. A positive trade balance indicates a trade surplus while a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying more Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. However, if the balance is a deficit, Swiss consumers are buying goods from trading partners which translates into higher demand for foreign currencies placing downward pressure on the value of the Franc.