Chronicles of 2025

Investing / Others
2716

This might be interesting for some. Excerpt from heated phone call between CH & Trump

TLDR -: Trump said CH is stealing 40b from US, refused to talk about services and more or less asked to get the difference in terms of „offer“

Quote

Speaking on condition of anonymity, a White House official portrayed the outcome of the call as the Swiss refusing to make meaningful concessions on trade barriers. A country that is very wealthy wasn’t going to get an agreement without major concessions, the person said.

For Trump, a goods trade imbalance of nearly $40 billion is akin to stealing from the US and he wanted the Swiss to increase its offer, the person said.

When Keller-Sutter didn’t offer anything that would see the trade balance change, Trump was so angry that the 39% rate he imposed on the Swiss hours later was chosen more or less at random, according to a person familiar with the matter.

Unquote.

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2717

Moral outrage has no impact on Trump because he has no morals. Need to play by his rules, it will be painful but there’s no other way. Say…the Swiss govt subsidized Swiss pharma’s sales to the US and US patients got no drugs from Roche and Novartis for a few years. Don’t bring a knife to a gunfight. I’m dead serious.

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2718

I think Swiss people are normally reasonable and try to find a solution. But most likely they don’t appreciate absurd discussions.

This has to be tough when dealing with Trump

Trump -: you are stealing 40B
CH -: trade deficit is not a „loss“ , it’s symbol of your prosperity and our high quality products
Trump -: you need to pay up
CH -: you should consider full trade balance not just goods, we buy 20 B more services from you.
Trump -: you are stealing 40B. We can steal whatever we want , we are MAGA
CH -: we don’t apply tariffs on any industrial goods for you . So not much to do
Trump -: so what are you offering? To pay back 40B. You cannot keep ripping us off
CH -: we are pledging investment in Pharma industry in US and we have commitments but they need to make enough money to actually make those investments.
Trump -: that’s not my problem. They should reduce their price by 80% and invest in US to produce. You know if you produce here, there is no tariff
CH -: not sure what we can do here
Trump -: you are rich, you can just pay US to sell here
CH -: that doesn’t sound reasonable
Trump -: I don’t care about you. 39% .. next

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2719

They will simply steal patents . Like they did for NOVO‘s ozempic. It’s not easy to fight with mafia unless you are Heisenberg :wink:

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2720

He will chicken out. The higher the tariff, the greater the damage to his position. Politicians have always just been pawns in the hands of those with real power. I’m confident that those with economic power in the US understand economics well enough to influence politics before things go wrong, as was the case with the Chinese tariffs.

Trump will stay in power as long as he can be manipulated, because he is actually easier to manipulate than many previous presidents. Just look at all the misinformation he is fed and loudly spreads in the news.

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2721

Funny enough. For whatever reason Novartis stock in NYSE listing is up today. And Roche is down only very slightly

2722

I remember reading that some LLM correlated what he says with what was on TV the night before. Could be bullshit or there could be something to it.

2723

He’s watching a ton of Fox News and repeats talking points from them. He often reacts to having seen things. Recently, he reacted to the Gaza situation, criticizing Netanyahu, after having seen video of famished children.

Remember his drones rant about them destroying the trees? That looks like another video he’s seen where drones did hit trees.

TV is his reality and he is discovering things through it. He’s both very easy to manipulate and a wild card, as he has a way to react according to what he’s seen/whom he’s talked to last and can do 180s that way (think Ukraine. Russia is still at 0% tariffs, BTW, though he’s recently threatened to use them if a peace can’t be brokered).

Other leaders, especially Keir Starmer (UK) and Claudia Sheinbaum (Mexico) have learnt to deal with him. We’re currently in the same basket as Canada, who gets tariffed over anything (most recently fentanyl allegedly crossing the border) and can’t figure out what to offer. They’ve adopted a very fighty stance due to the threat of annexation. We’re not there yet ourselves.

Just… don’t go to him using rational reasoning and fairness talking points. Say he’s the awesomest, give him something he can call a win domestically and a mansion in Gstaad and you’re done. One of the problems Switzerland is facing is that he wants to lower the price of drugs in the US, so Pharma is on his target list, and he wants to weaken the dollar, so the SNB policies are offensive to him. Not sure we can wiggle our way out of that without shifting our own stance and strategic outputs.

The alternative is to show strength, which makes him back off, and threat him like China does. I don’t think we have the strenght for it. It may have been an option when we could have stood with the EU to negociate and exert pressure together but that time is gone. We are now at a trading disadvantage with the EU unless we learn to deal with them and funnel our trade to the US through EU ports. They hold a lot of leverage over us, currently.

Edit: alternatively, get the US bond market to get ‘the yippies’ and he’ll back off too. Pretty sure we’ve got cards we can play in that area, though we should not do so alone. He’s playing divide and conquer, we have more strength if we unite with others.

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2724

At the moment pharma is also still not included in the tarifs. They have another deadline than CH.

In any case, I think it makes sense to wait painting the sky black unless these things are implemented at least for a few days. Everything just changes too often to sacrifice blood pressure prematurely.

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2725

But haven’t sectoral tariffs been in addition? This would mean things get cumulatively worse.

Imagine getting a 50% pharma tariff on top of the 39%.

2726

Hard to tell what is true and whatnot but at least some interpret it as them still being excempted ‘as of today’.

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Now this might soon change with these petty letters sent to them as well ofc.

2727

“It is unclear what the US wants from us,” said one Swiss lawmaker, who added it was fair to say the government was in a “state of shock”.

We need them to do better. Trump’s approach was “clear” from the start in that they do not “negociate” in the regular way and negociators who have dealt with them have consistently reported that Trump’s team didn’t tell them what they were looking for but instead threw broad threats like “you’ve been exploiting the US until now”. This isn’t news.

Our team has gone to the negociation table without doing its homework, it’s complacent at best…

We also need our government to be out of a “state of shock”. The situation has been clear since April. We have gotten 4 months to figure out a plan of action and contingencies. Being shellstruck by a no-deal and very heavy tariffs while we’ve been financial predators for a long time is fully unacceptable.

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2728

I think originally steel and aluminum tariffs were “replacing” the liberation day tariffs, rather than stacking ( which e.g. led to the steel parts of a Chinese PC case being the low tariff part when those were at 100+%). So pharma might be same?

2729

My thoughts exactly when I read “shocked” and “don’t know what they want from us”. The response is “you get paid a ton to not be shocked and to know”.

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2730

That idea comes with additional risks though :

Also, it is unclear how the administration intends to define and police the transshipment restrictions, which threaten 40% levies on any exporter deemed to have tried to mask goods from a higher-tariffed originator, such as China, as their own product.

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2732

I understand the sentiment but is is fair assessment ?

If you believe what was shared, the deal was already agreed between US negotiators and Swiss team. If Trump decided to rip it off at the last moment (on 31 July) to ensure that Swiss end up paying an unfair price for the deal, it’s not surprising that CH Govt was surprised. I wouldn’t be surprised if even Besent was surprised.

He did the same with EU and announced 30% after more or less agreeing on 15%. This pushed EU to give a pledge of 600B and 750B.

I am pretty sure CH will end up paying 40B per year in one way or another to make a deal. And I don’t know if this is what they should really do.

Remember Steve Miran said in his speech, countries have three options

  • pay trade deficit via tariffs (this is what CH got)
  • Reduce the deficit and pay lower tariffs (EU, Japan, Korea situation)
  • Write cheques to US treasury

I have seen many posts from EU and CH residents criticising their politicians. But I think residents also need to understand that there is a war ongoing (economic war). Similar to a military war, the negotiations with the attacking party is not easy and always comes at a painful cost unless you fight back. When the cost is revealed then people are also „upset“ and say „they caved and didn’t fight“

For example -: imagine Deal was made and the agreement is that CH will transfer 20-40 B per year as „market access fees“ to US sovereign fund. Would that be considered a success? Because that’s the only way Trump deals. In that case wouldn’t it be better to give subsidies to exporters and keep them competitive rather than paying US govt?

Edit -: I think all countries who didn’t agree to absurd demands have been punished (Canada 35%, India 25%, Brazil 50%, Switzerland 39%, China 50%)

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2733

As in any war you plan scenarios “if X happens we do A, if Y happens we do B, we have 2-3-4 fallback positions and counteroffers, we have pretend walkaway and real redlines” etc etc etc. That’s literally their jobs.

Edit: the scenario planning around a new US admin should have started back in mid 2024. Which reminds me a worrying thought I had when COVID-19 hit: I remember thinking that I EXPECT that any country would have some drawer somewhere with plans for possible scenarios like “if we get an earthquake we do X, flood we do Y, aliens we do Z” etc but the COVID-19 response showed that there wasn’t anything, everyone was winging it. And it’s not like humanity hasn’t faced pandemics before…

Europe has become dangerously complacent and soft.

That’s what I suggested above innit, a bit harsher but yeah.

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2734

Maybe this is the pretend walkaway. Calling Trump demand „absurd“ :wink:

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2735

The difference is that the absurd demands will never be delivered on. The EU/Japan solutions to close the deficit aren’t realistic (energy deal, investments) and mostly won’t happen. The 39% is real and seen as a failure by the public.
Now I’m concerned that Swiss voters think the solution is to be closer to the EU. Trump is a short-term bump on the road while the EU will remains the dangerous bureaucratic superstate that it it.

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2736

Their surprise surprises me: Trump has consistently shown that there are the decisions for which he doesn’t care, for which he lets others decide and is happy to do so, and there are the decisions he wants to make himself, for which he can decide things through a tweet at 3am blindfolding everybody including his people tasked with preparing that decision. Preparing for this is part of the homework that had to be done.

I would find that really unpalatable because nothing stops Trump from coming with another demand saying “hey, you need to pay 10B more now!” and we would be in the same position, except 40B poorer. Historically, protective measures have been countered with protective measures. Tariffs counter subsidies for the other country’s own industries. I’m no specialist, I don’t know all the options available (I’m not paid for it) but subsidies is a route I’d consider before giving money directly to the US. If “giving money directly to the US”, I’d try to do it by buying bonds, which the SNB does and Trump doesn’t like.

That’s fair. I know I’m in the minority when I think we should be stronger and that being stronger also means to be able and willing to take hits. Most people, including the actors of the economy, want to avoid hits at all costs. The federal council and the negociating team would probably have faced criticism either way.

Fair on principle, it’s possible there is theater and posturing in there, which would be part of the negociating play but I’m not convinced for these specific items. What gain is there to your counterparty thinking you’re in a state of shock when said counterparty is known to try to push whatever they want without consideration for your own interests and positions? It just incites them to go for more. The plan may be to get them to face the domestic consequences of high tariffs but if so, we are part of only a few with that high tariffs.

I’m taking your point, though, it’s possible they’re going for a facade of “we’ve never even thought of going under you to deal primarily with other countries and we feel betrayed!” while bettering the framework conditions of trade with other countries in an effort to redirect trade there and acting like “well, you didn’t really give us a choice” when caught in order to frame it positively for the US population’s opinion. I’ll eat my crow if that’s what is happening.

1 Like