Trump tariffs and reaction of the Swiss National Bank: the franc under pressure

Tension Rises in Currency Markets

In the second quarter of 2025, the Swiss National Bank (SNB) found itself compelled to intervene decisively in the foreign exchange markets.

The central bank was driven to this move by the increasing pressure on the appreciation of the Swiss franc, triggered by the announcement of new tariffs on U.S. imports by President Donald Trump.

According to data published on Tuesday, the SNB purchased 5.06 billion Swiss francs (equivalent to 6.36 billion dollars) in foreign currencies between April and June, marking the highest level of quarterly interventions in the past three years.

The Swiss franc, a safe haven in times of uncertainty

The announcement of tariffs by Trump has generated significant uncertainty in global financial markets. In particular, the Swiss franc rose by 7% against the US dollar and by 2.2% against the euro in the month of April alone.

This movement has been attributed by market operators to inflows into the franc, traditionally considered a safe haven asset during periods of financial and geopolitical turbulence.

According to Karsten Junius, economist at J.Safra Sarasin, “most likely the SNB intervened to mitigate forex volatility after U.S. President Trump announced his reciprocal tariffs in April.

These significantly increased political uncertainty and market volatility and may have led to inflows into the franc.”

The SNB Strategy: Interventions for Price Stability

The Swiss National Bank’s primary objective is price stability, defined as an annual inflation rate between 0 and 2%. A strong appreciation of the franc risks compromising this objective, making imports more affordable and thus lowering pressure on domestic prices.

For this reason, the SNB intervenes by purchasing foreign currencies and injecting francs into the market, in an attempt to curb the rise of the national currency.

In the second quarter, the activity of the SNB in the foreign exchange market stood out significantly compared to the previous five quarters, when foreign currency purchases had been much more limited, totaling 1.26 billion francs.

Dilemma for the SNB: between interventions and negative rates

The current situation places the Swiss National Bank at a difficult crossroads. On one hand, further interventions in the foreign exchange market risk attracting negative attention from the United States, especially after Washington included Switzerland on the list of countries monitored for unfair currency and trade practices.

On the other hand, the alternative would be to bring interest rates below zero, a move the SNB would prefer to avoid.

As Charlotte de Montpellier, economist at ING Bank, pointed out, “the SNB is currently facing two bad options. Either it makes more interventions in the forex, which would attract negative attention in the United States, or it brings interest rates below 0%, which it actually does not want to do.”

Relations with the United States and the Risk of Trade Tensions

Last week, the president of the SNB Martin Schlegel reiterated that the central bank will continue to use all tools at its disposal, including currency interventions, to achieve its inflation target, if necessary.

However, the currency issue remains delicate on the diplomatic front as well.

On Monday, the SNB and the United States Department of the Treasury reaffirmed that they do not intend to manipulate exchange rates for competitive purposes.

This statement comes after Washington added Switzerland to the list of countries under observation for possible unfair currency practices in June.

According to analysts, this stance should not alter the SNB’s approach, which will likely continue to resort to foreign exchange market interventions in the future, should conditions require it.

An evolving scenario

The situation remains fluid and the role of the Swiss National Bank is confirmed as central in the attempt to maintain the stability of the franc and the Swiss economy.

The effects of the tariffs imposed by Trump have once again demonstrated how much U.S. trade policy decisions can have global repercussions, especially on currencies considered safe like the Swiss franc.

The SNB thus finds itself having to balance the need to avoid an excessive appreciation of its currency with the risk of being accused of currency manipulation by the United States.

A delicate balance, which will likely require further interventions and constant attention to international dynamics.

In this context of uncertainty, the Swiss franc continues to be seen as a safe haven by investors, while the SNB prepares to face new challenges to ensure price stability and the solidity of the Swiss economy.