 "Are your gold purchases at risk after Trump levies tariffs on Swiss gold bars?")
Gold is India’s favourite metal and the go-to option for Indians during festivals. However, there’s a huge chance that Indians may have to shell out more for gold this festive season, courtesy Donald Trump’s new tariffs on Switzerland.
How is that? We explain the whole thing.
Trump’s tariffs on Swiss gold bars
According to a report by the Financial Times, the US has imposed tariffs on imports of one-kilo gold bars and 100 ounce gold bars from Switzerland. The media outlet reported that the Customs Border Protection agency said that these gold bars should be classified under a customs code subject to levies, according to a so-called ruling letter dated July 31.
This decision is in sharp contrast to the industry’s expectations that gold bars are classified using different customs code that is exempt from Trump’s countrywide tariffs. “The prevailing view was that precious metals remelted by Swiss refineries and exported to the US could be shipped tariff-free,” Christoph Wild, president of the Swiss Association of Manufacturers and Traders of Precious Metals was quoted as telling the Financial Times.
And this sentiment was echoed by Robert Gottlieb, a former precious metals trader and managing director at JPMorgan Chase & Co. “Gold is moved back and forth between central banks and reserves around the world. We never ever thought that it would be hit by a tariff,” he told The Strait Times.
Trump’s tariffs on Switzerland
The tariff on the gold bars is part of Trump’s 39 per cent levy on all Swiss products, which came into effect on Thursday (August 7).
On his decision to levy the steep tariff on the Alpine nation, the US president pointed to the $48-billion (€41.2-billion) trade deficit, which he said showed Swiss firms were “taking advantage” of the US. As a result, he put a much higher tariff on Swiss imports than the European Union’s 15 per cent. Notably, the 39 per cent tariff is the highest among developed countries.
To make matters worse, Swiss President Karin Keller-Sutter, who visited Washington, earlier in the week, was unable to clinch a trade deal with the US.
Swiss luxury and consumer goods will be hit the hardest owing to the tariffs, with watches, skin care and cosmetics products, precision instruments and chocolate expected to face large price rises in the US.
Impact on the bullion market
But does this impact the world and the global bullion trade? The answer is a resounding yes. And here’s why.
The global bullion trade is usually triangular: large gold bars move between London and New York, via Switzerland where they are recast into different sizes. London prefers the 400 troy ounce bar — a size of a brick — while New York opts for the kilo bar that resembles a smartphone.
Moreover, the one-kilo gold bars are the most common form traded on Comex, the world’s largest gold futures market and comprise the bulk of Switzerland’s bullion exports to the US.
If we go by last year’s gold trade between US and Switzerland, gold worth $61.5 billion will be subject to Switzerland’s tariff rate. This means that the same volume would now face approximately $24 billion in additional charges.
Experts note that Trump’s move to impose tariffs on gold bars will hurt the bullion trade. Brian Lan, managing director at GoldSilver Central, Singapore was quoted telling Reuters, “The tariffs on gold bars will create a dislocation or rather some issues in terms of settlement by big banks”.
Even UBS noted that it would cause disruptions; it warned that tariffs on large gold bars could spark disruption in funding markets, as the higher costs prompt a mass closeout of short exchange-for-physical (EFP) positions.
And based on this, gold prices spiked with futures rallying to a record high in early trade on August 8. US gold futures rose by 1.3 per cent at $3,499.30, after hitting an all-time high of $3,534.10. Meanwhile, the price spread between New York futures and spot prices widened by about $100.
Angel One, a renowned stockbroker firm in India, told Moneycontrol, “Gold traded higher following a report that the United States has imposed tariffs on imports of one kilo gold bars, while spot gold was headed for a second straight weekly rise on tariff turmoil and US interest rate-cut hopes.”
Gold on a high
Since the end of 2024, gold prices have seen a surge, briefly touching $3,500 per troy ounce. In India, the cost of gold has even gone up to as high as Rs 1,00,000 per 10 grammes. In fact, even today s(August 8), the price of 24-karat gold is Rs 1.02 lakh per 10 grammes.
Analysts note that this surge has been fuelled by fears of inflation, currency stability, and safe-haven demand amplified by US trade moves.
For Indian buyers, this means an additional cost and could even result in tighter supplies ahead of the festive and wedding seasons. A Business Today report even noted that jewellers have already reporting reduced demand or smaller-ticket purchases, while investors are shifting toward sovereign gold bonds and ETFs to avoid high physical premiums.
With inputs from agencies
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