Since the fall of the Berlin Wall and the end of the Cold War, we’ve lived through an exceptional period. For over three decades, the Western world shared a common foundation: democracy and free markets were held to be better, institutions created trust, and the rule of law and freedom of expression gave us our bearings. On top of that, international competition and division of labour created a culture of innovation and growing prosperity. This order not only shaped our politics, but served as the economic basis for growth and planning certainty.
Today, that foundation is crumbling. Ever since Donald Trump’s return to the White House, the belief that open markets and common rules are the best way forward has been fundamentally called into question. Instead of cooperation, it’s increasingly about putting your own interests first. Punitive tariffs are said to bring jobs back home, political deals are seen as a show of strength, and economic instruments are tools used to leverage the behaviour of other countries. A rules-based system that has endured for decades is increasingly being replaced by power politics and the law of the jungle.
One particularly worrying development is that even facts are being called into question. The dismissal of the head of the US Bureau of Labor Statistics after the number of new jobs created turned out to be too low shows how fragile the foundation has become. Data that fails to match the preferred picture is no longer accepted. But when numbers become a matter of opinion, the very basis for trust and foresight is eroded. Truth becomes negotiable, as does the basis for rational decision-making.
For Switzerland, this is more than just an abstract risk. An agreement on 10% punitive tariffs that was sought and negotiated has failed. Instead, we’re now hoping to improve or stave off the unilateral tariffs of 39 percent imposed on our exports. But there’s no guarantee of success. Even the EU, with comparatively better tariff agreements, can’t be sure that they won’t be called into question again during the next dispute, or simply at the next opportunity. This drains away the reliability on which open economies depend, making long-term planning more difficult and significantly increasing uncertainty.
We’re already seeing the economic consequences of this, particularly in the USA itself. Core inflation there is rising again as growth slows significantly despite massive fiscal stimulus. It’s hardly surprising that the US economy is suffering from its own policies: tariffs make imports more expensive, encourage inefficiencies and erode the competitiveness of domestic companies. Political rhetoric cannot permanently mask economic reality.
For our investment strategy, it means we remain cautious in the US market and are maintaining our above-average gold allocation, which has proven successful in this environment. At the same time, we’re not guided by short-term fluctuations. In a world where certainties and institutions are eroding, a broadly diversified and long-term strategy is and will remain the most reliable basis for stable investment results.
