The price of gold futures have soared to a record high after it was reported that the US would put tariffs on imports of 1kg bars in a further trade blow to Switzerland, which dominates the world’s refining industry.
Swiss exports to the US were hit by a crippling 39% tariff on Thursday after the country’s president returned empty-handed from a last-minute dash to Washington in an attempt to get the rate, among the highest imposed by Donald Trump, lowered.
It has subsequently emerged that US customs recommended that certain imports of gold bars that had been in a tariff exemption category should also be covered by the 39% rate.
The detail in a ruling letter – used by the US to clarify its trade policy – was signed on 31 July and seen by the Financial Times.
The price of gold futures for delivery in December hit an all-time intraday high of $3,534 (£2,630) after the news emerged.
Christoph Wild, the president of the Swiss Association of Manufacturers and Traders of Precious Metals, told the Financial Times that the ruling dealt “another blow” to the Swiss gold trade with the US and went against the prevailing view that gold would be exempt.
With about 70% of the world market, Switzerland dominates the trade of turning gold from mines and other sources into gold bars. The precious metal is also one of its biggest exports to the US along with pharmaceuticals.
The gold trade is usually circular between London, New York and Switzerland, with bars cast and recast in different sizes according to orders.
Switzerland imports about 2,000 tonnes of gold annually, much of it from intermediary banks in London, New York and elsewhere, which are later exported as gold is seen as a safe haven investment at a time of financial uncertainty.
In the 12 months to June, Swiss exports of gold to the US were worth about $61.5bn and this now faces an extra levy of 39%. Switzerland’s rate is among the highest in the world, after Brazil, Syria, Laos and Myanmar.
Gold prices had already jumped about 25% this year as investors sought a safe haven from the turmoil caused in the markets by Trump’s tariffs.
High net worth Americans are among those turning to physical gold, which can be held in vaults in the Swiss Alps for an extra cost.
According to reports, gold bars were in such demand in the US in May after Trump’s announcement of sweeping “reciprocal” tariffs the previous month that Costco capped how many gold bars could be bought in a day.
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Switzerland has been blindsided by Trump’s decision to single them out for punitive tariffs and industry leaders are already talking about the possibility of imposing short working weeks on workers in export businesses.
The country’s watch industry could be hit particularly hard hit with a $10,000 luxury watch now costing $13,900 to import.
The Swiss president, Karin Keller-Sutter, said after an emergency meeting called with the country’s cabinet on Thursday that she would seek further talks with the US over the country’s high tariff rate.
She said Trump’s shock decision had created an “extraordinarily difficult situation” for companies and their employees, while industry representatives called the tariffs “horrific”.
Switzerland will continue with its procurement deal to purchase F-35 fighter jets and the Patriot missile system from the US, despite Washington imposing 39% tariffs on Swiss imports, Keller-Sutter said on Thursday.
“The Federal Council has repeatedly affirmed that it is sticking with the F-35. If we didn’t do that, we would have no air defence,” she said.
