Trump or Harris? – Scenarios for Switzerland
Who will occupy the Oval Office next year? The political question of the year will likely be answered shortly or by January at the latest. But what are the potential implications of Donald Trump or Kamala Harris and their respective policies for businesses in Switzerland? Every four years, faraway US politics briefly gains prominence in entrepreneurs’ cabinet of worries. Does the upcoming US presidential election present an opportunity or a risk? Our speculative scenarios serve merely as food for thought because in the end things always turn out differently than one thinks they will.
The wait is (almost) over
Voters in the USA will head to the polls a few days from now. However, it’s by no means certain that the months of incessant media noise surrounding the US presidential election will come to a swift end after November 5. The election might very well be followed by electoral chaos. Recounts and other kinds of delays are practically assured in the foreseeably tight election outcomes in the swing states. Legal and procedural challenges could endure until December 17, the deadline for the official nomination of state electors, whose votes will be counted in Congress on January 6, 2025.
Political goings-on in the USA usually very rarely have a bearing on the day-to-day business of Swiss entrepreneurs and therefore don’t exactly belong in the top drawer of their cabinet of woes. Nevertheless, every four years a recurring question arises: What would red (Republicans) or blue (Democrats) imply for us?
Red or blue this year means Donald Trump or Kamala Harris. Sounding out the implications of US politics and policies for faraway Switzerland requires speculative creativity along the edges of the red and blue election platforms. Extreme-case scenarios conjured in this manner help one to gain an impression of the areas in which the next US presidency could have tangible impacts in this country.
Trump scenario: Thriving Swiss exports thanks to a strong US dollar
Donald Trump has voiced repeated complaints in recent months about an excessively strong US dollar. But nobody, not even a President Trump, can induce a currency depreciation at the press of a button. Quite the contrary, in fact, many items on Trump’s agenda are actually conducive to a strong US currency. For instance, his proposal to impose an across-the-board 10% punitive tariff on all imports would reduce demand for foreign currencies and stoke inflation at the same time. The US Federal Reserve would then have to raise interest rates to counteract that. The prospect put forth by Trump of restricting immigration would likewise have an inflationary effect and would tend to result in higher interest rates and a stronger US dollar. Swiss businesses would become more competitive on the back of a weaker franc, and the uniqueness of their products might enable them to boost their turnover in the USA despite the punitive tariffs. Even the tourism industry in Switzerland would reap beneficial rewards from the increased spending power of Americans, apart from the unpleasant side effect of having more flip-flop-shod hikers in the Alpstein mountain range. However, if Trump were to deliver on his pledge to slap a 60% tariff on imports from China, Swiss corporations would have to look into whether they could still use the Middle Kingdom as an export base or if it would make more sense to reshore operations.
A further cut in the corporate tax rate to 20% (which Trump calls a “nice round number”) or even to 15% would likewise benefit Swiss entrepreneurs either directly, since subsidiaries in the USA would have less taxes to pay, or indirectly via the wealth effect of booming stock markets, which would further stimulate US consumer spending. An end to the war in Ukraine within 24 hours, as Trump has heralded, is arguably only wishful thinking even when contemplating potential scenarios. However, mounting pressure on NATO countries to increase their defense spending to at least 2% of their GDP would be a certainty under a Trump 2.0 presidency and could potentially present an opportunity for Swiss arms manufacturers. Finally, Trump’s shifting opinion on cryptocurrencies in recent years also makes one sit up and take notice in Switzerland. The buildup of a national Bitcoin reserve in the USA and foreseeable lax regulation of the crypto sector sooner or later would also benefit crypto companies and financial institutions in Switzerland.
Harris scenario: A chance for Swiss Silicon Valley
Compared to the Trump scenario, Swiss businesses potentially could face a major headwind with a President Harris in the White House. A ban on “price gouging” and regulated price ceilings could adversely impact the food-and-beverage sector and the pharmaceutical industry, for example. In addition, Harris’s election platform is one thing above all: expensive. Its proposed tax cuts and tax credits for the middle class and families add up to several trillion US dollars that are compensated by much less revenue from tax hikes elsewhere. A persistently gaping budget deficit and rapidly increasing federal debt result on the bottom line under the Democrats (as it does under Trump as well, by the way). In the Harris scenario, though, the financial market could get overly annoyed about that, resulting in a loss of confidence in the US dollar and a sharp depreciation of the reserve currency. The Swiss franc would directly benefit from that, with well-known risks and side effects for Swiss exporters.
However, a Harris presidency would present opportunities for businesses that are able to provide suitable solutions for the green transformation. Companies that have dedicated themselves to sustainable technologies are likely to receive a lot of subsidies in the years ahead, but only for those entrepreneurs that cross the Atlantic. Yet Harris’s (redistribution) policies might have effects also in Switzerland. If she implements her idea of taxing unrealized capital gains, that could prompt tech billionaires to flee California’s Silicon Valley. They would then seek a combination of attractive tax conditions and locational appeal, which definitely can be found in Switzerland.
Keep calm (and carry on)
Things never turn out exactly the way one thinks they will, and similarly, hardly anything in the scenarios above will come true precisely as described, if only because it is highly improbable that Trump or Harris will gain control of both chambers of the US Congress along with the White House. A divided Congress would either dilute many initiatives and reform bills or render them altogether impossible. And even an erratic, flip-flopping President Trump shouldn’t cause Swiss entrepreneurs a lot of needless worry wrinkles. Anyone who does have them should ask if a lot changed for him or herself in the wake of the Trump 1.0 presidency. In the long run, it’s actually the major macroeconomic and political trends that harbor risks and opportunities for businesses, not who’s sitting in the Oval Office at any given time.
Regardless of who takes over the White House on January 20, 2025, it’s very probable that the USA will remain Switzerland’s most important trade partner during the next legislative period. Germany was already supplanted as the biggest export destination for Swiss goods back in 2021. In order to remain the world champion in innovation, in the future Switzerland must continue to cultivate close interaction and cooperation with the United States, which calls the shots on key technologies of the future such as artificial intelligence and biotechnology.
Speaking of artificial intelligence, one subcategory, generative AI, which is most widely known in the form of chatbots such as ChatGPT, looks set to become almost indispensable in the day-to-day operations of most Swiss businesses in the near future. Kaiser Partner Privatbank already utilizes the possibilities afforded by this new technology in its everyday work. So, we of course also confronted ChatGPT with the question of the how the US election outcome might affect Switzerland. But a disclaimer is necessary here: although ChatGPT has a vivid imagination, it thinks in stereotypes and paints a partly extremely exaggerated picture of the presidential candidates and their respective political mindsets that is quite detached from reality. Hence, the comments below should be construed mainly as satire.
Trump scenario: Switzerland as the 51st US state
After the election, Trump, in a completely unexpected gambit, decides to annex Switzerland as a new US state because he is enamored by the beauty of the Alps and by the country’s exquisite cheeses. “America needs more mountains!” becomes his new slogan. Swiss corporations like Nestlé and Roche suddenly get rebranded as American companies and have to adapt to the new US standards. Toblerone gets sold in an XXL version that’s larger than the Eiffel Tower and gets a patriotic makeover in the colors red, white, and blue.
One of Trump’s first projects after integrating Switzerland into the USA is building a massive wall around Switzerland’s borders to keep out “illegal cheese smugglers” from France and Italy. Swiss farmers are designated “Heroes of Dairy” by Trump, and a new tax is levied on alternative imported cheeses such as feta and Parmesan. Swiss agriculture flourishes because every American is required to keep a Trump-approved cow in his or her yard. Rental cows become so profitable that UBS converts its bank branches into co-working cattle barns.
Trump decides that the precision of the Swiss watch industry must finally be Americanized. He personally negotiates with Rolex to develop a Trump Presidential Timekeeper, a watch so accurate that it can turn time back an hour if Trump deems it necessary to do so. Swiss watch manufacturers earn record profits despite every timepiece having to be adorned with a small golden Trump logo.
In another whimsical move, Trump abolishes the Swiss franc and introduces the Swiss dollar. Banks in Switzerland rejoice because the new dollar is minted in gold and is perfect for collectors. Every bank branch now gives away small statues of Trump, and there’s a national celebration of Trump Financial Independence Day, on which every Swiss citizen receives a gold-plated rifle and a bag of cheese fondue.
Harris scenario: Chocolate for everyone
Under Kamala Harris’s leadership, Switzerland morphs into a new mecca of global justice. Swiss companies become obligated by law to donate 50% of their production to community chocolate centers, which hand out free chocolate to everyone. Switzerland’s famous watch factories retool and now manufacture only equal-time watches, ensuring that timepieces on the wrists of everyone around the world show exactly the same time, for there are no longer any time zones, just Harris Standard Time. This causes bewilderment, particularly in the case of international teleconferences, but a feeling of planetary synchronicity takes root.
Harris implements the largest environmental initiative in history – the Green Glacier Deal – with Switzerland at the center of those efforts. Swiss glaciers get covered with eco-friendly solar cells that take over generating the entire energy supply for all of Europe. Swiss energy companies like ABB and Alpiq are awarded contracts to transform the entire planet into “energy glaciers.” Swiss banks finance the project through special “glacier savings accounts” that pay out an annual dividend in the form of glacier snowmelt.
Under the Harris administration, the federal parliament building in Bern gets converted into a giant yoga center, where legislators reach decisions through collective meditative breathing. Swiss companies are forced to cut their work time to five hours a week to give employees more time for “personal enlightenment.”
In a bold and daring move, Harris extends the traditional neutrality of Switzerland to the entire cosmos. Swiss diplomats negotiate peace treaties between Earth and new intergalactic civilizations. Swiss businesses now no longer export just to the USA, but also to Alpha Centauri, with the price of milk mysteriously staying stable despite the long interstellar supply chains.