The gold price edged lower today as a war of words between Switzerland and the U.S. over tariffs on the precious metal heated up.
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Retaliation Rate
The chief executive of Swiss watchmaker Swatch (SWGAY), Nick Hayek, told Swiss newspaper Blick that Switzerland should impose a 39% export tax on gold bars bound for the U.S. This would be in retaliation for the 39% rate on Swiss imports into the U.S. brought in by President Trump in his tariff trade tirade.
The spot gold price was down 0.3% in early trading, with SWGAY ticking 0.23% lower.
It also comes after suggestions that 1kg and 100-ounce gold bars would be subject to import levies by the U.S. Customs and Border Protection Agency.
This meant that gold bars of this weight from Switzerland, which is one of the world’s largest exporters of gold, would now face a 39% tariff upon entry to the US. However, Trump said earlier this week that gold would not face these tariffs.
“Now is the time to go on the offensive. Switzerland should order a 39% export tax on gold bars for the U.S.,” Hayek told the paper. “That’s where we have to get at him. That’s his Achilles’ heel.”
The Swiss Association of Manufacturers and Traders in Precious Metals (ASFCMP), however, quickly stepped in to lower the temperature.
It said that while ideas to better balance bilateral trade were welcome, careful consideration needed to be given to Switzerland’s longer-term interests.
“An export tax on Swiss gold destined for the U.S. would not only harm Switzerland economically, but also damage the reputation of a country that has consistently promoted and defended free trade,” ASFCMP President Christoph Wild said.
The Swiss Economy Ministry declined to comment on the proposal, but said the support of business representatives was in general welcome and helped underscore the close economic ties between the US and Switzerland.
Gold Glistens
Trump has justified his 39% tariff by pointing to Switzerland’s sizeable trade surplus with the U.S. Part of that is due to gold exports. Switzerland is continuing to hold talks with U.S. officials aimed at lowering the US tariffs.
The gold price is also likely to have been hit today by the stronger U.S. dollar but the main drivers behind its relentless rise this year – see below – are still in place.
The gold price has been on quite the tear this year because of global trade and economic uncertainty. This tends to make gold a safe haven in the eyes of investors. An expected interest rate cut in the U.S. next month is also likely to keep gold shining.
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