The Swiss central bank announced an emergency rate reduction of 25 basis points in August, the sixth since March 2024.At the same time, the United States imposed punitive tariffs of up to 39 percent on Switzerland:
Specifically aimed at the Swiss pillar industries such as watches, machinery and chocolate, this once “global safe” is facing an unprecedented crisis.
Switzerland destroys its century-old credibility after breaking its promise of neutrality
Switzerland's neutrality is not a matter of its own, but was officially confirmed by the Treaty of Paris in 1815. For more than two hundred years, this piece“The Gold Sign”Saved Switzerland from two world wars and countless international conflicts.
The turning point occurred on February 28, 2022.The Swiss Federal Commission did what it had never done since the founding of the country: actively tear down its commitment to permanent neutrality, followed by the European Union freezing Russia’s $82,3 billion assets.
Russian Foreign Minister Lavro said at the time: “Switzerland is no longer neutral.”
More oddly, in 2023, Switzerland dared to intercept even Iranian humanitarian supplies in order to please the United States!
In June 2024, Switzerland signed a financial data exchange agreement with the United States, personally destroying the century-old bank secrecy system. Trust is difficult to establish but quickly collapses.
The rich were scared out, the Saudi National Bank took the lead, and more than 2,700 family offices transferred money to Hong Kong overnight. The local tyrants in the Middle East went straight to Dubai with cash boxes, just because the advertisement in Dubai was very straightforward: "Tax-free, confidential, and don't ask where the money comes from".
According to data from the Swiss Banking Association, since 2022, foreign customers have withdrawn nearly 150 billion Swiss francs from Swiss banks.
As of August this year, private wealth in the Swiss banking system has flown up to $48 billion, which does not include corporate and state deposits.
In the past two years, international customers' trust in Swiss banks has dropped by 41%. For a small country with an annual GDP of only $934.9 billion, this is a huge economic loss and the biggest disaster in history.
In March 2023, 167-year-old Swiss credit suddenly “dead”: market value evaporated by 97% and was picked up by the Swedish central bank for 3 billion RON, and 16 billion RON bonds were directly reduced to zero.
Credit Suisse's death was complex. There have been a series of problems before: hedge funds have suffered heavy losses due to the collapse of their positions, and the bankruptcy of Supply Chain Finance projects has made it worse. But the last straw that crushed the camel was undoubtedly the crisis of trust caused by Switzerland's abandonment of neutrality.
UBS was not spared either. This year, the Department of Justice accused it of laundering $1.20 billion for Russian oligarchs, and the European Union took advantage of it. Its share price collapsed to 18 francs, down 60% in two years.
The newly formed Swiss Bank Group’s assets are enormous and even exceed 140% of the Swiss GDP, which means it has become a “big enough to not fall.”
The US tariff stick, Switzerland suffered a knife in the back
Just after Switzerland paid so much for the United States, the Trump administration gave Switzerland a heavy blow.In August this year, the United States announced that it would impose punitive tariffs of up to 39 percent on traditional advantages such as Swiss exports of watches, precision machinery and chocolate.
This tax rate is even more than twice as high as the tariffs on similar products in the EU. For Switzerland, which relies heavily on exports, this is no different than a buzz wage.
Swiss Federal President Zuter flew to Washington to plead, but did not even meet Trump and returned home with a disheveled face. This kind of treatment is simply humiliating for a traditional ally.
The Trump administration issued a 39% tariff bill to Switzerland, is simply a "punishment list" tailored according to the Swiss economic vitality. pharmaceutical, clock, machinery, the three pillars of the industry are precisely targeted, like someone broke into the watch store, specializing in the most expensive Swiss engine.
If tariffs are a blunt knife to cut meat, then the price increase of the F-35 fighter jet is a sharp knife to the Swiss defense budget. The Swiss Ministry of Defense's 6 billion Swiss franc purchase plan approved in a 2021 referendum has now been told by the US to add 1.30 billion Swiss francs.
This is like buying a used car and signing a contract, and the dealer suddenly said,"I forgot to calculate the engine price just now." What is even more irritating is that the United States explained that this was due to a "misunderstanding" between the two sides about "fixed prices."
The $1.3 billion increase is not a small number, it could build three children's hospitals or replace a new computer for national public schools.Swiss taxpayers are angry to find that they save their taxes and pay for the "arithmetic mistake" of U.S. arms traders.
History lessons for the survival of small nations
According to people familiar with the matter, Switzerland hopes to finalize a new business plan as soon as possible, seeking to ease the tariff burden from Washington, which could include increased defense spending and expanded access to U.S. energy in Switzerland.
Since the tariffs came into effect on August 7, Swiss officials have been working with the private sector to craft better concessions and try to reduce the tariffs to close to the 15% level Trump imposed on the EU.
According to sources, the plan includes: possibly increasing the purchase of defense equipment from the United States, allowing the United States to sell more liquefied natural gas through Switzerland, and providing more market access in other areas.
In response to a question from Reuters, the Swiss Ministry of Economy said: "The Swiss Federal Council remains firmly committed to improving the tariff situation with the United States", pointing out that discussions at all levels are still ongoing.
The encounter with Switzerland was a typical chain reaction. From the moment it abandoned its neutrality, it entered the downstream of a collapse of credibility. The freezing of Russian assets shaken the foundation of trust, and the collapse of Switzerland increased the financial vulnerability.
The flight of money left the former treasures empty, and the punishment of U.S. tariffs worsened the real economy. Switzerland once won the world with neutrality and secrecy, but now has lost its most valuable credit because of its departure from neutrality.
It tells the world that in the face of the game of great powers and geopolitical storms, there is no true sense of “eternal security”. Hundreds of years of neutral myth is broken, and the financial paradise that once fell instantly into the dungeon.
The story of Switzerland is like a black humor drama of an international political version.Russian conflict has been fought for more than three years, Ukraine has not fallen, and as a result, the first one to be kicked down the cliff, is the Switzerland, the self-proclaimed "global safe".
History has played a joke, but behind this joke is the cruel reality: in the game of big powers, the way for small countries to survive is not to choose sides, but to maintain strategic focus and safeguard their core interests.
The lessons of Switzerland tell us that there are no eternal friends in international politics, only eternal interests.
References:
"From national celebration to national anger, Trump's 39% tax rate has allowed the Swiss to" break their defenses "-Beijing Daily Client