The US economy is in crisis and on the brink of recession. There is also a lot at stake for local investors and companies in the midterm elections on Tuesday. The US economy is hugely important to Switzerland – in 2021 the US was Switzerland’s largest exporter for the first time.
Who should win? From a stock market perspective, the answer is clear: the Republicans! “A divided government would lead to a stalemate in US politics, which would reduce the likelihood of significant fiscal changes and thus reduce investor and market uncertainty,” said Vontobel chief economist Reto Cueni. Swiss equities would benefit from the expected rebound in US equities.
If the Democrats can defend their majority in Congress, Cueni expects uncertainty. “Because that could lead to higher tax expenditures and further regulation of the environmental and technology sectors.”
No chance of a free trade agreement
The geopolitical situation is also tense. If Republicans won a majority in Congress, America would become even more unpredictable for Europe and Switzerland, says US expert Claudia Brühwiler, 40, of the University of St. Gallen. “Many Republicans have criticized the current Ukraine policies of Democrats and Joe Biden. It is conceivable that they are looking for a change of course.” Major US aid programs for Kiev could suddenly find themselves in trouble.
In any case, Switzerland will not have much to gain from Washington in the coming years. Attempts to reach a free trade agreement in the US have been unsuccessful. Neither in the era of Donald Trump (76) nor now under Joe Biden (79) were there top-level negotiations. “The Americans are busy with themselves, so we don’t have a priority,” says FDP foreign policy maker Christa Markwalder (47).
Whoever is in power ultimately plays a subordinate role. “We have very good economic relations.” The apprenticeship programs offered by Swiss companies are especially appreciated. Because the US does not have a dual education system. “Switzerland is respected – by Democrats and Republicans.”