Insights 
VT 
The US is nearing a trade agreement with Switzerland, marking progress for countries yet to secure such deals with the US. Reports suggest the deal may include a 15% tariff, aligning with the EU rate and below the current 39%. However, the agreement is not finalised, and previous talks have collapsed.
A 15% tariff would create conditions similar to the US-EU trade dynamics. Swiss growth may continue to slow temporarily in Q3/Q4, though there’s cautious optimism for slight growth improvements. Expectations are for growth to rebound in the following year.
Complex Negotiation Details
Negotiation details with the US remain complex. If Switzerland secures a deal without sectoral tariffs, particularly benefiting industries like pharmaceuticals, it would be favourable. This potential outcome hinges on the agreement’s approval, with uncertainties persistent under the current US administration.
The possibility of a US-Switzerland trade agreement points toward a stronger Swiss franc. We have seen the currency struggle for direction in recent months, with data from September 2025 showing a slowdown in Swiss exports to the US by nearly 5% year-over-year. A deal lowering tariffs from 39% to 15% should reverse this trend, making bearish positions on the USD/CHF pair, such as buying put options, a logical strategy for the coming weeks.
We also anticipate a positive reaction in the Swiss equity market, particularly for export-driven companies. The Swiss Market Index (SMI) has lagged other European indices this year, posting a modest 2% gain year-to-date as of November 2025, reflecting the weight of this trade uncertainty. A successful deal would likely trigger a relief rally, making SMI call options an effective tool to capture that potential upside.
Volatility and Market Reactions
Volatility is another key area to watch, as the outcome remains uncertain. The VSMI, the Swiss volatility index, is currently trading at elevated levels around 17, compared to its five-year average of 13, because traders are pricing in the risk of the talks failing again. For those confident in a positive resolution, selling volatility through options strategies could be profitable as a signed deal would likely cause the VSMI to fall sharply.
However, we must remember that a similar breakthrough was expected this past July before talks collapsed. The specific terms of the deal, especially any carve-outs for the vital pharmaceutical sector, will be critical. Traders should therefore manage risk carefully, as the market reaction will be sharp whether the news is good or bad.
