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Gold Rally Helping China Towards Less Reliance on the Dollar and U.S. Financial Dominance

Written by IntaCapital Swiss on October 15, 2025. Posted in News & Reports. Leave a Comment

China and its partner countries in BRICS* have long aspired to develop an alternative currency to the US dollar, as well as their own payment systems and other financial instruments that would reduce global dependence on the de facto reserve currency and the financial dominance of the United States. In this context, the three-year bull run in gold, confounding many sceptics and recently breaching the USD 4,000 per ounce mark (yet another record), is aiding China in its quest to diminish US influence across global financial markets.

*BRICS is an intergovernmental organisation formed as an acronym for Brazil, Russia, India, China and South Africa, established in 2009 (with South Africa joining in 2010). Membership has since expanded to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Saudi Arabia has been offered full membership, though its government is still considering the proposal. Partner nations with potential for future membership include Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan, and Vietnam.

Experts suggest that Russia views BRICS as a means of countering Western sanctions, while China, through BRICS, is expanding its influence across Africa with ambitions of becoming the leading voice of the “Global South”. Analysts predict that over time, BRICS will evolve into both a geopolitical and economic powerhouse, posing a direct challenge to the G7 group of nations. Current data indicate that BRICS countries account for 44% of global crude oil production, with a combined economic output exceeding USD 28.5 trillion, equivalent to approximately 28% of the global economy.

The global spotlight remains firmly on gold, and China has been steadily accumulating reserves of the yellow metal for over a decade. Experts estimate that the nation’s gold stockpile is now the sixth largest in the world. The metal’s ascent to record highs is helping China pursue its geopolitical and economic objectives. Amid escalating global tensions, protectionist tariffs, and a widening rift between the United States and its traditional allies, Chinese policymakers are capitalising on the moment.

For the first time, the Chinese government has established an offshore vault for the Shanghai Gold Exchange in Hong Kong, enhancing its status as an international trading hub. China has also approached several countries with offers to store gold in its bonded warehouses. Experts suggest that such initiatives will encourage sovereign wealth funds and central banks to trade the stored gold, diverting business away from established centres such as the London Metal Exchange (LME).

Data shows that China is the world’s largest gold producer and is expanding its influence within segments of the financial system where it faces the least resistance. The yellow metal is playing a pivotal role in helping the government achieve several of its economic ambitions. Financial commentators note that controlling a larger share of the global bullion market could elevate China’s international standing, with gold reinforcing the wider use of the yuan. This could ultimately allow China to offer the world an alternative to US financial dominance, bringing it closer to realising its long-standing vision. China has even eased capital controls to enhance its weight in financial markets, while its resurgent technology sector continues to attract international investors.

However, despite its substantial gold holdings, China has yet to make significant progress in promoting the yuan as a dominant currency within the commodities markets. Although some cross-border contracts are denominated in the yuan, analysts note that for key commodities such as oil and copper, yuan contracts possess only a fraction of the liquidity seen in dollar-denominated benchmarks and remain far from displacing the US dollar in global trade, particularly among developing countries.

Nevertheless, China is renowned for its long-term strategic approach, and its efforts to cultivate stronger relationships with central banks play a key role in its plan to provide an alternative currency framework. In light of Western sanctions on Russia and other countries, China’s economic system may appeal as a network insulated from Western political interference. As part of its persuasion strategy, China is expected to highlight examples such as Venezuela’s gold, valued at around USD 1 billion, which has been frozen for years in the Bank of England.

Western nations and other developed economies would be unwise to underestimate China’s ambitions. Should Saudi Arabia decide to join BRICS, those ambitions would gain even greater momentum. Some analysts argue that President Trump’s policies are inadvertently facilitating China’s rise, with America’s massive debt burden and escalating tariff disputes straining relationships with traditional allies. Moreover, as global debt continues to climb and geopolitical tensions intensify, fuelled further by the now popular “debasement trade” (selling currencies and buying gold), China’s ambitions may well be realised sooner rather than later.

Swiss Government Offering Gold Concessions to U.S. for Improved Tariffs

Written by IntaCapital Swiss on October 8, 2025. Posted in News & Reports. Leave a Comment

To reduce the tariffs currently standing at 39%, imposed by President Trump, the Swiss government has offered to invest in the United States’ gold refining industry in the hope that the White House will reconsider its position. The tariff has already harmed exports* to the United States, and in a statement, the Swiss Government said: “Diplomatic and political exchanges will continue with a view to achieving a quick reduction in additional tariffs.”

*Exports to the United States have been severely affected since the 39% tariff came into effect. In August, exports fell by 22% (excluding gold and adjusted for seasonal fluctuations) compared with the previous month. Swiss watch exports to America dropped sharply in August, further compounded by weak demand from China. In a statement on Thursday, 18 September, the Federation of the Swiss Watch Industry announced that all major markets were down, with the U.S. market (the industry’s largest) falling by 24%, and overall exports down 17% year-on-year.

*Gold bullion exports to the United States in August fell to 0.3 tonnes, taking a dramatic decline. However, clarification from the White House confirmed that tariffs on gold would not be implemented, a decision only formalised in September, allowing the resumption of the bullion trade. America’s trade deficit with Switzerland fell by one-third in August compared with the previous month, from CHF 2.93 billion to CHF 2.06 billion (USD 2.6 billion), marking the lowest level since 2020, according to data from the Swiss Customs Office. Overall, Swiss exports declined by just 1%, as increased shipments to Europe, Canada, and Mexico helped offset the U.S. tariffs.

Experts have advised that, according to sources close to the talks, proposals made by the Swiss government to both U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer involve Swiss refiners relocating their lowest-margin business to the United States. The offer, insiders report, also includes melting down gold bars traded in London and recasting the metal into the smaller sizes preferred in New York.

Records show that the bullion trade with the United States is, on average evenly balanced. However, this changed in the first quarter of the year as fears arose that President Trump might impose tariffs on gold. This not only created a substantial surplus but also opened up highly profitable arbitrage opportunities for traders. The first quarter distortion of Switzerland’s trade surplus figures with the United States (bullion accounted for than two-thirds of the surplus), ignited criticism of the gold industry. Attention quickly turned to the canton of Ticino, home to the world’s largest gold refining hub, through which almost all of the world’s gold passes.

Analysts suggest that the Switzerland’s gold refining industry is an easy target for U.S. politicians. However, to portray it as the villain behind Switzerland’s distorted trade surplus with the United States is considered by many to be far-fetched. The surplus, which appears to be the justification for President Trump’s 39% tariff, is, according to some experts, merely an excuse to raise levies. They note that the United States itself had a gold surplus of approximately USD 3.6 billion in 2024. The surge in gold bullion shipments from Switzerland to New York altered that balance, as many Swiss refineries operated at full capacity to melt down the 400-troy-ounce bars traded in London into the smaller one-kilogram bars preferred in New York.

Overall, the Swiss economy has remained relatively resilient. However, due to the tariffs, the government has warned that slower growth is expected for the remainder of the year. The Swiss government is currently working to diversify its trading partnerships and, together with other members of the European Free Trade Association (EFTA), signed a new free trade agreement with the South American Mercosur bloc in the third week of September. EFTA comprises Norway, Switzerland, Liechtenstein, and Iceland, while the Mercosur countries include Argentina, Bolivia, Brazil, Paraguay, Uruguay, and Venezuela.

U.S. Politicians Ensure First Government Shutdown for Six Years

Written by IntaCapital Swiss on October 2, 2025. Posted in News & Reports. Leave a Comment

The deadline for the United States Congress to approve federal funding was midnight, and once again, politicians have put America in jeopardy by refusing to agree on a budget. The Republicans and Democrats are locked in a conflict over healthcare subsidies, and while the Republican Party controls Congress, they need the Democrats to pass the funding bill. Today’s standoff could lead to the loss of thousands of federal jobs, as President Trump may well use the shutdown to trim many thousands of jobs from federal agencies. In fact, he has warned Democrats that the shutdown could well clear the path for more redundancies, which will coincide with his push to cut 300,000 federal employees by December of this year.

The current shutdown, the fifteenth since 1981, will suspend scientific research, slow air travel, delay the payment of salaries to United States troops, and lead to enforced holidays for 750,000 federal workers, costing USD 400 million per day. Regarding air travel, Vice President Vance has gone on record saying that essential staff who work through shutdowns, such as air traffic controllers, would be concerned about the non-receipt of paycheques. He warned air travellers that they may not arrive on time, as TSA (Transportation Security Administration) and air traffic controllers would not receive their wages today.

A stopgap measure was proposed to keep the government funded until 21^st November 2025. However, this was denied by Democrats, who, according to some commentators, would rather have government employees go unpaid than use the time to come to an agreement over federal funding. Both Republicans and Democrats are throwing accusations, casting blame for the shutdown at each other in the hope of gaining an early advantage in the 2026 midterm elections, where all 435 seats in the House of Representatives and 100 seats in the Senate will be up for re-election.

The problem with the funding bill is that the Democrats wish to add USD 1.5 trillion to the bill, primarily to boost healthcare and other funding. They have made it clear that not even a stopgap funding bill will be passed unless their USD 1.5 trillion healthcare funding is included, which, of course, the Republicans have flatly refused. Senior Democratic figures have accused President Trump and the Republicans of not wanting to protect the healthcare of the American people. If Congress does not approve a funding bill and the impasse continues, Obamacare premium tax credits will expire on 31st December 2025, leaving around 20 million people facing sharp premium hikes.

According to many experts, this has descended into a political impasse, with Team Trump saying they have the upper hand over the Democrats because they have rallied the rank and file behind the stopgap bill. The majority leader of the U.S Senate has said that the Democrats will be blamed, just as the GOP (Grand Old Party – Republican) was in 2013 when they engineered a shutdown over repealing Obamacare. However, this time the Democrats are asking for something to be added to the bill. The bottom line is that the Republicans need 60 votes to pass this bill (voted down by 55-45), and unless there is some political give, it appears that America is in for a lengthy shutdown.

USA and the World Bank Give a Boost to the Argentine Economy

Written by IntaCapital Swiss on September 25, 2025. Posted in News & Reports. Leave a Comment

Scott Bessent, the United States Treasury Secretary, has announced that Argentina is a “systematically important ally in Latin America” and went on to say that “all options are on the table” and “the U.S. is ready to do what is needed” to aid Argentina in stabilising its escalating financial woes. Recent heavy regional election losses suffered by President Javier Milei and a corruption scandal unnerved financial markets, placing in doubt the future of President Milei’s free-market and cost-cutting agenda. Such was the alarm felt by investors that it sparked off a run on the peso last week, which was threatening a devaluation of the currency.

Currently, President Milei heads the only Latin American economy that is allied to the United States, and Secretary Bessent was adamant that speculators would be defeated by confirming talks were taking place to provide a swap line of USD 20 billion to Argentina, and confirmed they were prepared to buy all the country’s dollar debt. Secretary Bessent went on to say that the “White House would be resolute in support for allies of the US” seeking to calm a market crisis engulfing the Argentine economy. Indeed, the peso on Monday of this week rose by 10% before rebounding to its level before the regional election loss, and dollar bonds issued by Argentina have edged higher following the latest intervention by Secretary Bessent.

However, the current calm pervading the Argentine markets is not guaranteed as Argentines will vote in mid-term elections next month on Sunday, 26^th October, and there is further alarm for investors as President Milei may lose his re-election bid in 2027. The opposition is likely to be the governor of Buenos Aires province, Axel Kicillof, who has ambitions of his own to be President and is emboldened by his recent wins in the provincial elections, but his economic views are unorthodox to say the least, and his record as described by political commentators is alarming.

Further help from Secretary Bessent when his backing turned out to be key in Argentina securing a USD 20 billion loan back in April. However, the central bank has in recent weeks stepped in to defend a weakening peso, with investors removing money from the country with worries about the government’s ability to keep the peso steady. When President Milei won the election in 2023, he pledged to bring runaway inflation under control, along with drastic spending cuts, and a stable peso was and is critical to that pledge. As a result, the Argentine central bank has in recent weeks stepped in to prop up the peso to the tune of USD 1.1 billion, which has severely depleted its holdings and put the country in an unenviable position when it comes to repaying its debt.

The intervention by President Trump via Secretary Bessent has proved to be timely. Analysts say data show that Argentina is a serial defaulter when it comes to debt repayment, but for now, markets are calm, and thoughts of default on repayments of debt have subsided. However, President Milei has very few seats in Congress, and any gains will be a boon, and the backing of the United States in such a forceful manner may well boost his flagging polling. However, if the mid-term elections go against President Milei and he has lost control of Congress, making it long odds on his re-election in 2027, experts in this arena suggest that even the might of the U.S. President and his dollars will not save him, and the markets may once again become unsettled regarding the economy of Argentina.

Federal Reserve Cuts Interest Rates

Written by IntaCapital Swiss on September 18, 2025. Posted in News & Reports. Leave a Comment

Today, and for the first time since December 2024, the FOMC (Federal Open Market Committee) cut their benchmark interest rate by 25 basis points to 4.00% – 4.25%. This comes after literally months of sustained abuse from the President of the United States, directed at the chair Jerome Powell to slash interest rates. The FOMC voted by 11 – 1 to cut interest rates, with Governor Stephen Miran voting for a 50-basis point cut with the new benchmark interest rate now at its lowest since November 2022. The two governors, Waller and Bowman, who dissented at the last vote both voted with the majority this time round in what is seen as a victory for Chairman Powell as experts had predicted as many as four dissenters.

Chairman Powell commented “Job gains have slowed and the downside risks to unemployment have risen” and he suggested that it will be reasonable to expect Trump’s tariffs will lead to a one-time shift in prices. He went on to say “But it is also possible that the inflationary effects could instead be more persistent and it is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem”. Analysts confirmed the interest rate cut was due to the rise in unemployment and officials from the Federal Reserve hinted that there may be two more cuts before the end of the year.

Experts suggest that the Federal Reserve is facing a dichotomy in that lowering borrowing costs will indeed make money cheaper but there is a risk of potentially causing prices to rise and with prices already on the up and due to tariffs the price rises could be even more severe. Recently released data showed that inflation had risen to 2.9% in August having hit a low of 2.3% in April of this year. The director of the CBO (Congressional Budget Office – known to be non-partisan) announced on Tuesday of this week that tariffs have already negatively impacted prices and they were increasing at a faster rate than anticipated.

Federal Reserve officials have said that the labour market is now their biggest concern, with Chairman Powell having stated at the end of August that the “Labour market is experiencing a curious kind of balance where demand and supply for workers had slowed” whilst warning that downside risks to the job market could see an increase in layoffs and unemployment. Chairman Powell also added, “Labour demand had softened and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant. I can no longer say the labour market is very solid”.

Commentators have already suggested that the ¼ of 1% cut in interest rates will not even begin to appease President Trump who has hurled abuse at the Federal Reserve and very personal abuse at Chairman Powell for not drastically slashing interest rates. President Trump wants to return to the era of very cheap money but has so far lucked-out on his ambition to control the Federal Reserve. Indeed, his efforts to fire Governor Lisa Cook (a Biden appointee) for alleged mortgage fraud will now go to the supreme court. Trump has long coveted controlling the Federal Reserve and he has already got influence in the Supreme Court. If, as one expert commented, Trump did gain control over the Federal Reserve and cut interest rates to 1% there would indeed be an initial big boom but it would be followed by a massive bust.

Bond Vigilantes Continue to Circle

Written by IntaCapital Swiss on September 17, 2025. Posted in News & Reports. Leave a Comment

What is a bond vigilante? They are investors who sell off government bonds to protest against official monetary or fiscal policies that they deem irresponsible or inflationary. To this end, they use the sell-off to punish governments by increasing bond yields and thus increasing the cost of government borrowing. The term Bond Vigilante was coined by an American economist Ed Yardeni in the 1980s to describe how bond markets can act as a restraint on government spending and borrowing by creating financial pressure that forces policy changes.

In the first week of this month, global bond markets were hit with a sharp sell-off before pairing losses by the week’s end, and experts advise that lessons learned from the bond markets were that investors were becoming jumpy regarding government borrowing. In the United States, triggers for the jump in yields were attached to a US court ruling which said that many of the tariffs placed on countries by President Trump were illegal, putting hundreds of billions of dollar revenue at risk. This led to lenders holding long-term treasuries to demand higher yields.

Across OECD* (Organisation for Economic Co-Operation and Development) nations gross debt as a share of GDP was 70% in 2007 and rose to 110% in 2023, the rise being responses to the global financial crisis 2007 – 2009, the Covid-19 pandemic 2020 – 2023 and the surge in the price of energy that engulfed Europe after the invasion of Ukraine by Russia on 24^th February 2022. Therefore, as government debt piled up, so did the cost of borrowings making debt markets vulnerable to episodes of quick-fire sell-offs as was seen in the first week of September.

*OECD Nations – This is an international organisation committed to democracy and market economies that serves as a forum for its 38 member countries to collaborate, compare policy experiences and find solutions to common economic and social problems, to promote sustainable economic growth and well-being worldwide. Some expert commentators suggest that they are failing on all fronts.

In the United Kingdom the recent sell-offs in the thirty-year long-dated gilt market was an indication of how global investor sentiment had shifted to nervousness about the government showing a lack of fiscal responsibility. It was pointed out by the relevant commentators that the United Kingdom still had sticky inflation issues which is currently the highest of G7 countries. These were just a number of trigger issues that jolted the bond vigilantes into action and no doubt their eyes will be firmly fixed on the autumn budget.

France is equally at the mercy of the bond vigilantes, with commentators wondering just how far politicians can push the bond market. The current deficit sits at 5.4% of GDP with recent efforts continuing to fail. Any new effort will undoubtedly bring the resignation of the next Prime Minister, the latest one, Francois Bayrou, resigned having lost a no-confidence vote. It seems impossible that this current parliament will pass a budget that will lower borrowing costs, meanwhile the current debt sits at 114% of GDP and the 10-year yield on French government bonds has risen to 3.6% which is higher than that of Greece and on a par with Italy (considered the benchmark for fiscal floundering). Sooner or later the far right and the left in the French parliament will have to come to an agreement on lowering borrowing costs, but all the while the bond vigilantes are circling.

The pressure is mounting on leaders to find reliable and credible fiscal answers to the current growing debt pile and the cost of borrowing. In the United Kingdom, pension funds are helping by buying less government bonds, however in the United States the President’s repeated assaults on the US Federal Reserve and his mercurial style of policymaking will keep the benchmark treasury market volatile. Leaders such as Trump, Starmer, Macron and others will have to summon up the willpower to rein in spending otherwise experts expect the markets will impose it for them, something no government would like to see.

U.S. Investment Surges into European AI – A Swiss Perspective

Written by IntaCapital Swiss on August 20, 2025. Posted in News & Reports. Leave a Comment

Since pulling back during 2023’s tech downturn, U.S. investors are once again muscling into deal flows in Europe – and AI is the magnet. Data released by PitchBook* shows the U.S. share of deal making in Europe is once again climbing, and the standout category which is pulling American investors back into the market is AI. Experts suggest that from a global perspective, the capital base is there as U.S. private investment in AI in 2024 was circa USD 109 Billion with ample dry powder** to deploy into the European markets when the time is right.

*PitchBook – Is the premier resource for comprehensive, best-in-class data and insights on the global capital markets.

**Dry Powder – This refers to unallocated cash reserves or highly liquid assets held by investment firms, venture capital funds, hedge funds, and private individuals which in this case is ready to be deployed for investment purposes.

A Brief Overview

From a Swiss vantage point there are three forces which are converging and the first is a dense research-to- start-up pipeline anchored by ETH Zurich and EPFL.

ETH Zurich is a public research university and is widely regarded as a leading institution known for its strong focus on science and technology, significant research contributions, and prestigious academic standings.

Based in Lausanne, EPFL is Europe’s most cosmopolitan university and it welcomes students, professors, and collaborators from more than 120 different countries. EPFL has both Swiss and international vocation and focuses/specialises on three different missions being teaching, research, and innovation.

The second force is regulatory clarity via the EU AI Act, with Switzerland chartering a lighter sector-based path.

The third force is Switzerland’s world-class infrastructure and their electricity reliability which makes the country (and its neighbours) a first-class destination to build and run AI.

Why Switzerland Hits the Sweet Spot

Talent and Spin-Out Velocity

ETH Zurich’s AI ecosystem is a massive magnet to investors as in 2024 ETH spinoffs raised CHF 425 Million across 42 rounds, a ten year ten times increase and a powerful sign that even in choppy markets the pipeline to start-ups is in a healthy state. Indeed, the ETH A1 centre’s network of affiliated start-ups spans applied robotics, industrial AI, and model reliability which according to experts is exactly where corporates from the United States are looking to invest their capital.

Regulatory Readability

As opposed to the EU’S (European Union) horizontal* AI Act**, Switzerland’s Federal Council chose a more sector-specific approach, integrating AI duties into existing laws whilst planning to implement the Council of Europe’s AI convention. This they felt would be more beneficial, rather than passing a sweeping one size fits all AI law, which for founders and investors reduces the legislative shock whilst still tracking the usual international norms on safety and rights. It should be noted that the EU AI Act is highly relevant to Swiss companies who are selling into the Eurozone/single market, as for example obligations for general purpose AI (GPAI)*** and the EU is ensuring that timelines do not slip. All in all, the dexterity and agility of the Swiss together with the EU-grade clarity on market entry makes investment decisions by U.S. investors much easier.

*Horizontal in Law – This refers to the ability of legal requirements meant to apply only to public bodies to affect private rights. It arises where a court dealing with a legal dispute between two private entities interprets a legal provision to be consistent with certain legal norms in such a way as to affect the legal rights and obligations of the parties before it.

**EU AI Act – On 12th July 2025 this Act was published in the Official Journal of the European Union and entered into Law and became binding on 1st August 2025. This Act refers to the European Union’s Artificial Intelligence, a comprehensive regulation aimed at governing the development and use of artificial intelligence systems within the EU. It is the first major AI regulation of its kind, and focuses on risk assessment, and categorisation of AI systems to ensure safety and ethical development.

***GPAI – This refers to all General-Purpose AI models as defined within the EU AI Act. These are powerful AI models trained on broad datasets****, capable of performing a wide range of tasks, and potentially integrated into various downstream AI systems. The EU AI Act places significant obligations on providers of these models, especially those with systemic risks.

****Datasets – This is a structured collection of data used to train and test artificial intelligence models. These datasets provide the raw materials for AI algorithms to learn patterns, make predictions, and perform tasks and can, simply put, be viewed as a textbook from which AI models can learn.

Infrastructure Gravity

The Alps supercomputer at the CSCS (Swiss National Supercomputing Centre) is a critical component offering significant processing power for AI applications and is a key part of the AI initiative at positioning Switzerland as a leading hub for trustworthy AI development. Overall, the build-out of AI in Europe is accelerating fast with San Francisco’s Open AI Inc launching their Stargate Norway, the first AI data centre initiative in Europe. Whilst this build does not situate itself in Switzerland, its proximity and any grid stability across the region changes the equation as to where to build AI-heavy companies and experts suggest that Switzerland is primed as a European hub that U.S. investors will back for “near-compute*” opportunities.

*Near-Compute – This refers to the concept of placing processing units (like CPU’s – central processing unit or GPU’s – graphic processing unit) closer to memory or even within the memory itself, rather than relying solely on traditional computing architectures. This approach aims to minimize data movement between memory and processing units which can significantly reduce latency and energy consumption.

Switzerland has enjoyed a number of AI deals such as Meteomatics in St Gallen, a USD 22 Million to scale high-resolution AI-enhanced weather models and drone systems selling into the automotive, aviation, and energy sectors. Another success is Daedalean the Zurich avionics-AI pioneer has just entered into (subject to closing a USD 200 Million acquisition by Destinus a big player in the European aerospace sector, who pioneer autonomous flight systems. Other successes included Zurich’s LatticeFlow, an AI governance and reliability model and ANYbotics which operates in the robotic sector and industrial AI.

Conclusion

Whilst Switzerland’s overall start-up funding cooled in 2024 (down CHF 2.3 Billion which is -15% Y-O-Y), interestingly AI rounds doubled accounting for 22% of all rounds, and is uniquely placed due to infrastructure, power/electricity, the ability to build AI with EU-Act readiness, the ability to stand next to compute, and the ability to use the country’s events and clusters as magnets for U.S and global investment. The macro capital tide is unmistakable with generative AI venture capital setting a new pace in Q1 and Q2 in 2025, and Switzerland sits first and third in Europe and globally respectively for Deep Tech venture capital funding per capita, which, according to experts indicates a strong international interest in the country’s AI ecosystem.

Furthermore, Microsoft has made substantial investments in Switzerland’s AI and cloud infrastructure including a USD 400 Million investment (announced in June of this year) to expand its datacentres near Zurich and Geneva which will meet growing demand for AI services whilst keeping data within the country’s borders. As mentioned before, the companies from the United States are taking bigger and bigger slices of the European AI action, and Switzerland will, according to experts, massively benefit because it pairs deep technical IP and enterprise-friendly regulation with direct access to the Eurozone’s markets.

Trump Hits Switzerland with 39% Tariffs

Written by IntaCapital Swiss on August 6, 2025. Posted in News & Reports. Leave a Comment

The highlight of Switzerland’s summer calendar is the national holiday (Switzerland’s birthday), which fell last Friday, 1st of August, but all of Switzerland, including the government, woke up to the headlines that President Donald Trump had hit the country with punitive tariffs of 39%. The tariffs cover all Swiss imports to the United States and in 2024, according to data released by the United Nations COMTRADE data base totalled USD 72.88 Billion, leaving America with a trade deficit of USD 38 Billion, (though other figures suggest it’s as high as USD 47.4 Billion,) the 13th largest of any nation with the USA. This has obviously caught the eye of President Trump who has made it clear that he wishes to eradicate trade imbalances with all of America’s trading partners.

This has come as a huge shock for both the politicians and the business elite as only a few weeks ago the government was exuding confidence regarding its tariff negotiations with the United States. Indeed, back in May, Switzerland hosted the United States and China in the hope of preventing a trade war which gave Switzerland’s President Karin Keller-Suter the opportunity to meet with Scott Bessent, the United States Trade Secretary. It appeared that the meeting was successful having been told that Switzerland was second in the queue after Great Britain to strike a trade deal with the U.S. at potentially a 10% tariff, much lower than the 31% as unveiled by President Trump back in April’s “liberation day”.

Therefore, the 39% has come at a complete shock and politicians are divided as to the negotiation tactics, with some saying the government were too obsequious, and others saying they were too tough, while many just said the negotiation tactics were not up to scratch. However, the trade deficit according to officials is the sticking point, and basically the Swiss sell more to the U.S. than it buys, and the population of just 9 million quite frankly just do not like U.S. goods such as their cheese, chocolates, and cars. However, the Swiss have tried to compensate for the trade deficit by reducing their own tariffs on imported U.S. industrial goods to zero, and many of the Swiss companies have multibillion dollar investments in U.S. plants. Data suggests that Swiss investment in the U.S has created circa 400,000 jobs, furthermore Trump has ignored service industries which would bring the deficit down to USD 22 Billion, but sadly President Trump is just fixated on trade imbalances.

Analysts point to one problem which is where on earth did the 39% come from, which makes it appear that President Trump is just arbitrarily picking out numbers from thin air. There appears to be little wiggle room in negotiations, but Switzerland could import LNG (Liquified Natural Gas) from the U.S. plus they can also point out they are committed to investments in the United States totalling USD 105 Billion. In Q1 two thirds of the trade deficit was due to shipments of gold bullion, this was due to the price of gold not due to any added value by the Swiss refineries. Experts point out that gold is not manufactured in Switzerland but reprocessed into bars and one offer to Trump could be a one off tariff of 50% on gold.

This Thursday, 7th August is deadline day for tariffs and experts point out that the Swiss government will be moving heaven and earth to get an extension. Indeed, officials from the Swiss State Secretariat for Economic affairs have already contacted their counterparts in the United States to try and negotiate a way forward, plus the President of Switzerland herself is flying to Washington (without an invitation) to meet face-to-face with Trump in the hope of avoiding the increase in tariffs. Trump is known for flip flopping at the last minute so the President of Switzerland can only hope they can extend the current deadline and get a reprieve, otherwise the damage to their economy could be quite serious. Experts point out that the key to the current tariff impasse would be that instead of dealing with Trump’s negotiators is instead to win over the man himself.

For Switzerland’s export-driven economy, the impact could be significant. Key industries—including luxury watchmaking, pharmaceuticals, and precision engineering—depend heavily on access to the U.S. market. Higher tariffs risk eroding profit margins, raising prices for American consumers, and prompting Swiss firms to reassess their U.S. expansion plans. Politically, the move is a shock to a nation that prides itself on neutrality and stable bilateral relations. It signals that even close, low-conflict partners are not immune from politically motivated trade actions.

The tariffs also complicate Switzerland’s position within the EU-Swiss economic framework, as Brussels weighs its own responses to Trump’s trade policy. In the short term, Swiss exporters may absorb some costs to maintain market share, but over time, the pressure could accelerate efforts to diversify export destinations and invest in U.S.-based production—ironically, one of Trump’s intended outcomes.

Overview of the New Trade Agreement Between the European Union and the United States

Written by IntaCapital Swiss on August 6, 2025. Posted in News & Reports. Leave a Comment

On Sunday 27th July, and after weeks of tense behind the scenes negotiations, the President of the European Union, Ursula von de Leyen, shook hands with United States President, Donald Trump, concluding a trade pact a week before the upcoming deadline as set by the White House. The trade deal was announced by the two leaders at Donald Trump’s golf course, Turnberry, located in Ayrshire, West Scotland. Those close to the negotiations said the “framework deal” was finally stuck, and ultimately it took a face-to-face meeting between the two leaders to reach an agreement. However, a number of EU member countries have already voiced their disapproval and in some cases outright hostility to the agreement.

The White House administration has lauded the agreement as a big win for Donald Trump, advising that based on last year’s trade figures the US governments will be better off by circa USD 90 Billion. Furthermore, included in the agreement is the EU’s promise to purchase arms and energy products from the United States which analysts estimate to be in the region of hundreds of billions of US Dollars. Elsewhere, carmakers in the EU will only face a 15% surcharge on imports into America, whereas the global tariff introduced in April is 25%. Indeed, the Eurozone agreement to a 15% tariff on most exports (steel will remain at 50%) to the United States has prevented a trade war which would have probably dealt a hammer blow to the global economy.

Not all European leaders were happy with the agreement with initial words coming from Benjamin Haddad, France’s Junior Minister for Foreign Affairs, who called the agreement “unbalanced”, Hanneke Boerma, the Dutch Minister for Foreign Trade, said the deal was “not ideal” and urged further negotiations with the United States, and the French Prime Minister Francois Bayou said it was “tantamount to a submission”. On Wednesday 30th July France’s President, Emmanuel Macron, said the deal is “not the end of it”. He went on to say that “the European Union had not been feared enough in negotiations with the United States towards a trade deal”, pledging to be firm in follow-up talks. Meanwhile, Friedrich Merz, the German Chancellor, said the agreement would “substantially damage the nation’s finances”, France’s far right leader, Marine Le Pen, said the agreement was a “political, economic and moral fiasco”, whilst the Hungarian leader, Viktor Orban, announced that “Trump had eaten von de Leyen for breakfast”.

A number of experts have already said that this is a bad deal for the European Union. In fact, when Great Britain announced a 10% tariff agreement with the United States, the statement that came out of Brussels was “we will never accept such humiliating terms”. Analysts now suggest that the hit to the EU’s economy would be 0.4 percentage points by the end of 2026 and the average tariffs on imports from the Union are set to rise from 1.5% (when Trump was elected) to circa 16%. Meanwhile, experts are suggesting that the EU is now a pushover and will have a weakened hand in future negotiations, and recently the Sino/EU trade negotiations came to nought partly as in part the Chinese would not make any concessions to a European Union that lacks leverage.

However, von der Leyen said the deal avoided the near-term catastrophe of an all-out trade war and had nullified any near-term uncertainty. Sadly, some experts and economists have said there is a perception that the European Union cannot defend their own interests which will undermine their position as a key geopolitical player which is the key to their wish for the Euro to play a bigger global role. Indeed, the president of the European Central Bank, Christine Lagarde, recently advocated a greater international role for the Euro, specifically its active function as an international reserve currency. Experts suggest that since the US/EU trade agreement such words may well fall on deaf ears. The US/EU trade agreement is not a done deal, just look at all the negative comments and outright hostility being shown by some member countries towards this agreement, and it suggests some very choppy seas are just around the corner.

The Federal Reserve Keeps Interest Rates on Hold

Written by IntaCapital Swiss on July 31, 2025. Posted in News & Reports. Leave a Comment

On Wednesday, 30^th July and for the fifth straight time, the Federal Reserve’s FOMC (Federal Open Market Committee) kept interest rates steady at 4.25% – 4.50%. The committee voted 9 – 2 to keep interest rates on hold with the two dissenting voices belonging to Governor Christopher Waller and Governor Michelle Bowman. Both governors are appointees of President Donald Trump and experts point out that such dissension from political appointees has not occurred for over 30 years which is a sign of both political pressure and economic uncertainty being felt by the Federal Reserve. Chairman Powell indicated he was not concerned with the dissenting voices but he did say “On the dissents, what you want from everybody and also from a dissenter is a clear explanation of what you are thinking and what arguments you are making”.

Officials from the Federal Reserve downgraded their view of the economy saying “recent indicators suggest that growth of economic activity moderated in the first half of the year” as opposed to previous statements where growth was characterised as expanding at a solid pace. Interestingly, analysts have pointed out that today’s interest rate decisions were made without key data, and the Chairman of the Federal Reserve Powell has pointed out that decisions are currently data driven. This key data is the Commerce Department’s Personal Income and Outlays report, (due out 31^st July), which provides essential data on household spending and income, and the Personal Consumption Expenditures price index which is the Federal Reserves favoured inflation gauge.

Following the FOMC meeting, Chairman Powell said the central bank has confidence in the economy of the United States and that it is strong enough to hold interest rates steady as it determines how the tariff policy of President Trump ultimately plays out and their effect on the economy. He went on to say “Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation could be short lived, reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent and that is a risk to be assessed and managed”.

Despite political pressure and personal insults from President Trump to Chairman Jerome Powell the Federal Reserve held interest rates steady. Despite many experts predicting a rate cut at the next meeting of the FOMC (16^th – 17^th September), the financial markets pared back bets expectations for a rate cut, whilst interest rate futures indicated a 50/50 chance of a rate cut in September down from 60%. Data released showed that GDP had increased on an annualised basis by 3% in Q2 after Q1 showed a shrinking of 0.5%, experts put the swing down to companies front-loading of imports to avoid tariffs. Consumer spending advanced at its slowest pace over Q1 and Q2 since the pandemic.

Chairman Powell has made it clear that there is still room to hold rates, something that will no doubt send President Trump into a fit of rage. Data released since the FOMC’s last meeting on 17th – 18th June has given officials little reason to shift from their “wait and see” policy stance, which has been in effect since Donald Trump’s elevation to the White House. Whilst there will be a cornucopia of data between now and the September meeting of the FOMC, experts point out that the Jackson Hole Economic Symposium (in Kansas City) is being held between 21st – 23rd August. The Federal Reserve Bank of Kansas City hosts central bankers, policymakers, academics and economists from around the world, and Chairman Powell has been known to indicate forthcoming policy shifts, so perhaps financial markets and President Trump will get a peek into future Federal Reserve policy.

Tag: USA