29 Sept 2025
The United States recently imposed a 39% tariff on Swiss gold imports, creating significant instability in the global gold market due to Switzerland's pivotal role as a refining hub. This decision has led to market uncertainty, price divergences between New York and London, and potential disruptions for crucial arbitrage mechanisms involving gold conversion.
The United States recently levied a 39% tariff on gold imports from Switzerland, a measure considered burdensome for the Swiss gold trade.
Switzerland functions as the world's largest gold refining center, renowned for its quality and discretion, despite not producing gold itself; billions of dollars in gold continuously flow into and out of the country from global mines to major financial institutions. This processing capability makes Switzerland a central, albeit small, player in the global gold market, and any disruption to its trade has significant implications for its balance of trade.
Swiss customs data reveal record-breaking gold exports to the US, exceeding $36 billion, which constituted over two-thirds of Switzerland's trade surplus with the US in the first quarter. The 39% tariff decision by the US has created significant uncertainty and displeasure among Swiss authorities, who previously considered themselves immune to such heavy duties.
A recent surge in US gold imports was driven by an arbitrage opportunity across the Atlantic, further fueled by concerns over potential tariffs on gold bars. This mechanism involved European traders delivering gold bars to New York for favorable prices, requiring the conversion of standard 400-ounce London bars into 1kg or 100-ounce bars suitable for the COMEX, a refining process predominantly handled by Switzerland, establishing it as a crucial node in this arbitrage.
The arbitrage flow reversed in the second quarter due to initial tariff concerns; however, following an exemption for gold bars from tariffs, US gold prices stabilized back to London levels. During this period, Switzerland experienced a net outflow of over $1 billion in gold, and the tariff exemption suggested future Swiss gold exports would not be affected by these duties.
Despite Switzerland's substantial involvement in the global gold trade, its refining industry consists of only five investment-grade gold producers, each employing a few hundred people, making it a relatively small-scale business. Refiners typically earn only a few dollars per ounce during the casting process, despite the significant overall value of the gold they handle.
The Swiss National Bank previously argued that gold exports should not be factored into US trade surplus calculations for accurate trade analysis. Swiss officials were engaged in ongoing negotiations regarding the tariffs, though these had not yet yielded a definitive outcome.
A recent Financial Times report indicated that 1kg gold bar imports to the US are now indeed subject to tariffs, leading to an unusual surge in the premium for New York gold futures contracts over London spot prices. This report cited a US Customs and Border Protection letter classifying 1kg and 100-ounce gold bars, deliverable on COMEX, under a specific tariff code, removing their previous exemption and causing market fear that significantly boosted the US premium.
The news prompted active gold delivery contracts to jump, with premiums exceeding $125 per ounce, causing New York gold prices to reach a record high of $3534 per ounce, while London prices remained relatively stable. This divergence mirrors earlier market spikes attributed to US tariffs creating price discrepancies between London and New York, although significant ambiguity persists regarding the definitive tariff status of gold.
The imposition of tariffs on gold bars, particularly considering Switzerland's vital role in converting large bars to COMEX-deliverable sizes, presents a serious impediment for brokers, banks involved in ETF transactions, and entities requiring gold reserves in US treasuries. In the short term, this situation might provide support for gold prices; however, if the current ambiguities remain unresolved, the market could face heightened volatility and increased distrust.
Should these ambiguities persist, the market faces heightened volatility and increased distrust.
| Aspect | Detail | Impact |
|---|---|---|
| US Tariff on Swiss Gold | 39% tariff imposed on imports of gold from Switzerland. | Considered heavy for imports, creating imbalance in the global gold market and displeasure among Swiss authorities. |
| Switzerland's Global Role | Largest gold refining center globally, processing billions in gold; crucial for converting 400oz bars to COMEX standards. | A vital node in global gold trade and arbitrage, any disruption severely impacts its trade balance. |
| US Gold Import Surge | Driven by arbitrage opportunity and tariff concerns, requiring refining of London gold bars for New York delivery. | Switzerland became a critical intermediary, handling the necessary gold conversion for the arbitrage mechanism. |
| Recent Tariff Reinstatement | Financial Times report indicated 1kg gold bars imported to the US are now subject to tariffs, citing a CBP letter. | Caused New York gold futures premium to surge over London spot prices, reaching record highs, creating market uncertainty. |
| Market Volatility and Outlook | New York gold prices hit an all-time high amidst uncertainty, while London prices remained relatively stable. | Provides short-term price support, but persistent ambiguity could lead to severe volatility and increased distrust in the market. |
