The impact of trade tensions on Switzerland: A quantitative assessment
Laurance Wicht
Abstract
While Switzerland's net creditor position is sizable, it has long remained steady despite large and persistent current account surpluses. This pattern reflects valuation losses on Swiss foreign assets driven by movements in exchange rates and assets prices. We compute estimates of these valuation effects and the associated rates of returns on Swiss external assets and liabilities. While Switzerland benefits from a modest advantage in terms of yields (interest and dividends in percent of holdings), we show that this has been dwarfed by valuation losses driven by the strengthening of the Swiss franc, even before the crisis. We then assess the extent to which the return on assets and liabilities (including capital gains) provides a hedge against movements in Swiss GDP and the purchasing power of income. While we find little evidence of such a hedge at a quarterly frequency, financial returns provide some offset for business cycle movements at the horizon of a year. This hedging property has strengthened since 2010 and is more pronounced for privately held assets and liabilities than for the fast-growing holdings of reserves by the Swiss National Bank.
This paper quantifies the impact of trade tensions between the United States and China. Using a general equilibrium Ricardian trade model, it provides a Swiss-centric analysis of two tariff escalation shocks. Counterfactual analysis shows that welfare and trade effects are broadly negative for the United States and China. In contrast, both tariff escalation shocks could lead to a small increase in real GDP in Switzerland. The labor productivity of Swiss manufacturing sectors
increases slightly, especially in sectors that are well-connected to China. While trade collapses between the United States and China, Swiss real exports to the United States in selected sectors increase significantly.
Claudia Bernasconi
[No abstract is available for this item.]
Swiss market access in a global trade war
Alessandro Nicita, Marcelo Olarreaga, Peri Silva and Jean-Marc Solleder
Abstract
We measure the extent to which Swiss market access would be affected in a global trade war. After calculating the change in tariffs at the tariff-line level that Swiss exporters would face in a trade war, we then aggregate them at the industry, destination market, and global level using theoretically well-grounded aggregation methods first introduced by Anderson and Neary (1996). Our results suggest that Swiss market access will be seriously jeopardized in the event of a global trade war, with an increase in tariffs faced by Swiss exporters of 34 percentage points. The largest increases in tariffs would be experienced in large destination markets where Swiss exporters currently benefit from low export barriers (the European Union, the United States and Japan). Chemicals, machinery, professional and scientific equipment, and food experience above average increases in tariff barriers.
Export hurdles in practice
Emilie Gachet and Tiziana Hunziker
Abstract
The theme of protectionism has received plenty of media coverage since Donald Trump’s election as President of the United States and the subsequent trade war with China. It is a geographically widespread phenomenon, which also encompasses Europe and Switzerland. For this study, we surveyed just under 560 exporting Swiss small and medium-sized enterprises (SMEs) to obtain their views on the issues of protectionism and export barriers. More than 40% believe these do not pose any challenge, or at most only a minor one. The resurgence of protectionism since 2016 appears to have had only a slight impact on Swiss SMEs so far. Just 23% of respondents expressed the view that the situation had deteriorated compared to five years ago, whereas half did not perceive any change. This could be attributable to the fact that just 20-30% of surveyed SMEs are experiencing trade obstacles in the most important European markets. Barriers are higher in other markets, however. Just under 50% of SMEs perceive barriers when exporting to the United States, and this figure rises to as much as 54% when it comes to the third most important region – China/Hong Kong. The principal instrument of the current trade war, namely, conventional tariffs, is problematic for just under half of respondent companies. However, customs procedures and the workload associated with the provision of conformity assessments and product origin documentation, which are all categorized as non-tariff trade obstacles, are perceived as greater challenges. When it comes to obstacles to the export business, the two most significant factors of all – ranking above both tariff-based and non-tariff barriers – are perceived by respondent companies to be the price of their offering and prevailing exchange rates.
Swiss goods exports and the Sino-US trade war: Conflicting transmission mechanisms
Simon J. Evenett
Abstract
This paper identifies various channels through which the Sino-US trade war and the January 2020 truce affect Swiss goods exports. As a third party to this bilateral trade war, Switzerland’s goods exports were not targeted directly. Nevertheless, Swiss goods exports were implicated and evidence is presented that scales different transmission mechanisms. Given that leading central banks eased monetary policy partly on account of the macroeconomic consequences of the Sino-US trade war, a new dimension to the trade and monetary nexus has arisen. The consequences of this for the conduct of Swiss monetary policy are discussed
Eliminating the IMF. An Analysis of the debate to keep, reform or abolish the Fund.
Edoardo Beretta