Swiss gold industry in crosshairs after US tariff debacle

{"text":[[{"start":null,"text":"

"}],[{"start":10.45,"text":"Switzerland’s failure to negotiate lower tariffs with US President Donald Trump has sparked a national debate over the role of its gold industry and whether it should pay for the “damage”."}],[{"start":25.18,"text":"The world’s largest gold refining hub has been rocked by Washington’s announced 39 per cent rate on select Swiss imports and an unexpected levy on gold bars, which was first reported by the Financial Times. The moves were spearheaded by Trump as part of his broader push to reduce America’s trade deficit."}],[{"start":47.78,"text":"The White House said on Friday it would issue an executive order “clarifying” the US stance on gold bar tariffs in the near future."}],[{"start":57.260000000000005,"text":"Although Switzerland has no gold mines itself, the gold shipped by its refineries to the US — worth about $61.5bn over the 12 months ending in June — weighed heavily on the country’s trade surplus with the US, leading some in the country to blame the sector for the failed trade talks. "}],[{"start":82.26,"text":"Gold was the country’s single largest export last year at 27 per cent, ahead of pharmaceuticals, according to the Swiss National Bank. "}],[{"start":92.4,"text":"A sharp rise in Swiss gold exports earlier this year, which was driven in part by US investors rushing to bring metal in ahead of potential future tariffs, has drawn particular attention in Washington. "}],[{"start":106.98,"text":"The Swiss government, which returned home empty-handed from a last-minute trip to the US this week, has vowed to continue negotiations for a better deal. "}],[{"start":117.17,"text":"But some centrist and leftwing politicians in Switzerland are now openly calling for the gold sector — which employs around 2,000 people and generates more than $100bn in revenue — to be made to pay in some form for the fiasco."}],[{"start":134.8,"text":"“If a sector is damaging a whole national economy and the sector itself is not really a big value to Switzerland by employees or taxes, then you have to think about it, maybe this sector has to pay for the damage happening right now,” said Hans-Peter Portmann, a lawmaker from the liberal Free Democratic party of president Karin Keller-Sutter."}],[{"start":158.34,"text":"Portmann proposed sending gold back to where it came from — such as the UK, Brazil or the Netherlands — and let that country be responsible for transport to the US. A sustainability tariff on the industry could be “another option”, he said."}],[{"start":176.47,"text":"Voices demanding action are growing louder. Green party leader Lisa Mazzone has proposed the industry compensate Switzerland with “appropriate taxation” to counterbalance the effect of Trump’s tariffs."}],[{"start":190.81,"text":"Lawmakers from the Social Democratic party have also criticised the government for failing to anticipate that gold could become politically sensitive."}],[{"start":201.1,"text":"Nannette Hechler Fayd’herbe, chief executive for Europe at Lombard Odier, a Swiss private bank, said tariffs or restrictions on the industry might make economic sense if it can help with negotiations. "}],[{"start":214.68,"text":"“[If] the Trump administration is just looking at the overall headline import number from Switzerland . . . [it may] make sense on the Swiss side to find ways to at least temporarily disincentive Swiss exports of gold to the US, through trade barriers of some sort,” she said."}],[{"start":233.46,"text":"James Emmett, chief executive of refiner MKS Pamp, defended the industry against the recent domestic criticism, pointing out that Switzerland’s role as a refining hub was due to specialised expertise and regulation. "}],[{"start":249.71,"text":"“The precious metals industry, and gold in particular, is a very good flag bearer for Switzerland,” Emmett told the FT. “Swiss excellence is well sought after.”"}],[{"start":260.94,"text":"The global gold trade flows normally follow a triangular pattern, with large bars moving back and forth between London and New York, via Switzerland, where they are recast into different sizes. London and New York do not use the same size bars. "}],[{"start":279.02,"text":"These recasting services have been a huge driver of Switzerland’s monthly gold exports and imports — but for the refineries they are a very low-margin, price-competitive business."}],[{"start":292.59999999999997,"text":"At the start of the year, the refineries were busy melting down bars heading to New York, but that trade flow reversed in April, when the metal that had built up in the US started to flow back to London. "}],[{"start":306.67999999999995,"text":"In recent months Switzerland’s gold shipments to the US have dwindled to almost nothing, due to tariff uncertainty and the drawdown of US inventories."}],[{"start":318.50999999999993,"text":"Robin Kolvenbach, co-chief executive of the Argor-Heraeus refinery in southern Switzerland, questions the logic of using different size bars in different markets."}],[{"start":330.2899999999999,"text":"“It has led to the strange situation that we even got back boxes we shipped ourselves to New York three months ago, we just opened them, recast them, and sent them back to London again,” he said. "}],[{"start":344.6799999999999,"text":"“I would have been just as happy if there was a common standard, and those bars don’t need to go through Switzerland,” said Kolvenbach."}],[{"start":354.1099999999999,"text":"By contrast, the most valuable customers for the refineries are often in the luxury watch sector, as the refineries supply precious metals for their products."}],[{"start":367.4099999999999,"text":"The US tariffs on Switzerland could reduce demand for Swiss watches, or make it more likely that US customers buy luxury watches outside the US. "}],[{"start":378.5899999999999,"text":"Christoph Wild, president of the Swiss Association of Manufacturers and Traders of Precious Metals, says the industry has suffered from the “immense uncertainty” created by the ever changing US tariff rules, as well as from the political backlash inside Switzerland. "}],[{"start":397.2399999999999,"text":"“Bashing one industry or the other, is the wrong way to resolve this issue,” he said. “I really hope that we in Switzerland can stand together.” "}],[{"start":406.8799999999999,"text":"Simone Knobloch, chief operating officer at Valcambi, said the sector has been unfairly singled out. “In the end, the gold sector in Switzerland has simply reacted to demand in the market,” he said. “It is a pity it has not been appreciated.”"}],[{"start":424.6199999999999,"text":"In the trade talks, one potential carrot the industry is holding out is the possibility of investing more in US refining operations. The US is among the world’s largest gold producers, but has limited refining capacity."}],[{"start":440.9999999999999,"text":"MKS Pamp’s Emmett said the company was “committed to expanding our operations in the US,” noting that it already owns a minting operation in Oklahoma. "}],[{"start":460.6699999999999,"text":""}]],"url":"https://audio.ftmailbox.cn/album/a_1754876308_6324.mp3"}