Switzerland's benchmark SMI index sinks as traders react to the U.S. announcing a 39% tariff on the country - one of the highest rates in the world. CNBC's Carolin Roth reports from Zurich.

Zürich

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

Swiss shares experienced significant declines after the United States announced tariffs of nearly 40% on Swiss exports. The Swiss Federal Council convened to address the situation, with Business Minister Guy Parmelin indicating a willingness to revise Switzerland's offer to the US. Despite ongoing negotiations, no deal has been reached to avoid the tariffs, which are set to take effect soon. Major Swiss companies, including Tesla, Roche, Swatch, and Novartis, saw their stock prices drop, although the pharmaceutical sector appears to be excluded from the new tariffs.

Analysts warn that the tariffs could have a notable impact on Switzerland's export-oriented economy, with estimates suggesting a potential reduction in economic growth. Business groups have expressed concern over the potential loss of tens of thousands of jobs. The Swiss franc's appreciation against the US dollar and comparative disadvantages with the EU further compound the challenges. The Swiss National Bank may consider interest rate cuts to support the economy, as further trade diversification efforts are discussed.

Swiss shares slump amid tariff shock

Switzerland's Federal Council will reportedly meet this morning after the country's National Day holiday was interrupted by the US announcing tariffs of nearly 40% on its exports. Friday, Business Minister Guy Parmelin said the country is open to revising its offer to the US as President Karen Keller Souter finds herself in the center of a domestic blame game after a phone call with her US counterpart late Thursday. Failed to avoid steep levies due to come into effect on Thursday. Now here's a look at the heavy hitters in Switzerland. Tesla down 1.2%. Roche down about 2.3%. Despite the fact that pharma looks to be excluded from these 39% tariffs, you've got swatched down 3.4% and reach Mount down 2.6. Those were the two names we were expecting to see some heavy losses this morning and we are seeing some notable selling Novartis also down by about 1.3%. Let's get to Carolyn, who joins us now with more on the state of play in Switzerland. Caroline, I think the question investors are asking right now is will the Swiss find a deal with the US and will they find a deal with the US to avoid these 39% tariffs? The clock is ticking. That's the billion dollar question, and as you say, we are very, very close to that August 7th deadline only three days away. As of today, as of this morning, there are no confirmed plans by the Federal Council members, either the economy minister or the finance minister to actually fly over to the US and hammer out a last minute deal now they're meeting this morning, and there's been a lot of soul searching, some finger pointing to the US some finger pointing here in Switzerland over the weekend as to what actually went wrong and the capital mistake obviously was thinking that Donald Trump would sign the deal just because his trade negotiators said the deal was fine as it is. And according to the reports out over the last couple of weeks, the deal included a tariff rate that was a lot lower than the 39% closer to 1015% similar to what the EU and what the UK have struck. So that was the primary mistake that the US made. It's the primary mistake that was made. Thinking that Donald Trump had been informed. So what's next? Obviously negotiations are set to continue. Frantic attempts really to revive those negotiations, but nothing is certain at this point. So what Switzerland is bracing for what's the export oriented economy is bracing for is a very, very tough hit to the economy. Once with Swiss Research Institute has a factored in a 0.3% hit to the economy as a result of these tariffs, or even set 0.7% if the pharma industry is excluded. And as you rightly pointed out, Juliana, the pharma industry is not part of this 39% deal. There could be separate sectoral tariffs, but obviously one of Donald Trump's grievances with Switzerland is, of course, the pharma sector. Given the drug pricing that the likes of Novartis and Roche Weald over the US market, he wants to lower drug prices by between 50 to 80%. And he sent out the letters to the European pharma makers last week. When it comes to the domestic economy here, obviously some of the business lobbies, they're reeling and they're seething. And they've sent out statements saying that this is not justifiable. Tens of thousands of jobs could be at risk as a result of these tariffs. And of course, as one of the brokers this morning points out, there's a three-pronged whammy here for the Swiss economy and for the businesses. First of all, it's the tariff rate, 39%. Then of course, it's the exchange rate, which has appreciated by roughly 10% against the US dollar since the start of the year. And then of course, it is the comparative disadvantage vis-a-vis the EU and other countries when it comes to the trade competitiveness. So a really dark week for Switzerland and the way forward really is to work on the diversification efforts when it comes to the Swiss businesses. We had a guest on this morning. He talked about further advancing free trade negotiations and agreements with the likes of India, China, and other Mercosur states, of course, but also to some extent, margins will be hit. And the question is whether this will lead to a full-blown recession or just a technical recession. Caroline, on that note around the currency and further trade, I think it's fascinating to see that appreciation of the Swissy versus the dollar pretty much all year. Is there anything that we could see from the S&P in terms of targeting the currency here that would see some sort of depreciation? That's a very tricky question and a very important one. And I will say that over the course of 2024, the S&P has not targeted the currency. Why? Well, because of the political pressure that it might be under from the Trump administration. In the past, it's been labeled a currency manipulator. It does not want to draw the ire of Donald Trump once again. So they've steered clear from actually targeting the currency, also because it may not actually work. The job-owning or the ethics and prevention may not have the desired effect. And it turns out to be very costly for the S&P, which in the past, when it's gone down that route, has actually incurred heavy, heavy losses. So the most effective tool at this point when it comes to supporting the economy, despite the strength of the Swissy, may simply be interest rate cuts. And you know that we're already at 0%, and we may have to go back into negative territory come September. That now seems to be the base case assumption here in Switzerland.

A shipwreck off Yemen has killed at least 68 people, the UN's migration agency said, with dozens still missing after the boat carrying mostly Ethiopians sank.

Sana'a

Migrant boat sinks off Yemen, killing at least 68

After two unverified videos of Israeli hostages were released, Hamas said the hunger crisis in the region puts them at risk. The militant group said it would deliver food from the Red Cross to the hostages under a couple of conditions, including permanent humanitarian corridors.

Jerusalem

Middle East Conflict

Hamas says hunger crisis putting hostages at risk

U.S. President Donald Trump fired the U.S. commissioner of labour statistics after weak jobs numbers signaled tariffs weren’t yet leading to his promised economic boom.

Washington

Trump dismisses weak jobs numbers, fires labour statistics chief

Government scientists warn that the 2025 wildfire season in North America is projected to be the longest ever, with fires already causing significant damage across the western United States and Canada. Major blazes have led to evacuations, destruction of historic sites, and widespread air quality alerts.

Santa Barbara

Wildfire season in North America shaping as worst on record

A volcano in Russia's Far East has erupted after sitting dormant for 600 years. Scientists believe the eruption was triggered by the massive earthquake that struck the region last week.

Kamchatka Peninsula

Russian volcano erupts for first time in 600 years

An independent watchdog agency responsible for enforcing a law against partisan political activity by federal employees has opened an investigation into Jack Smith, the special counsel who brought two criminal cases against Donald Trump before his election to the White House last year.

Former Trump prosecutor Jack Smith faces probe by U.S. watchdog

New outbreaks of violence overnight into Sunday (August 3) rocked Syria straining a fragile ceasefire. Meanwhile residents in Sweida are calling access to more humanitarian aid.

As Suwayda

Humanitarian needs escalate in Sweida as truce frays

Parts of the European Commission's much-anticipated AI Act come into force this weekend. It's been hailed as the first piece of comprehensive legislation aimed at regulating AI globally, though critics say it doesn't go far enough.

Brussels

Rise of AI

EU's landmark AI act enters new phase

A Ukrainian lawmaker and a pair of local officials, as well as an unspecified number of National Guard personnel, have been caught in a major graft scheme that involved using state funds to buy drones and other military hardware at deliberately inflated prices in return for bribes.

Kyiv

Ukraine Invasion

Ukraine uncovers major drone procurement graft scheme

Over the past few days, Hamas and its ally Islamic Jihad have released three videos showing two hostages seized during the October 7, 2023, attack on Israel that triggered the ongoing war in Gaza. The videos sparked reactions from Israelis who are stepping up calls for a truce.

Tel Aviv-Yafo

Israeli hostage families protest in Tel Aviv

Pope Leo XIV celebrated the concluding mass of one of the most important events of the Holy Year. A million faithful filled the Tor Vergata esplanade in Rome. Pope Leo sent a message of hope for the young people afflicted by wars and recalled the words of his predecessor.

Rome

Pope Leo urges Catholic youth to spread faith and enthusiasm

President Trump explained why he fired Bureau of Labor Statistics Commissioner Erika McEntarfer on Friday. Government data showed fewer jobs were added to the U.S. economy last month than expected.

Trump announces new tariff rates, fires employment commissioner

Former Special Counsel Jack Smith, who ran two federal prosecutions of President Trump, is under investigation for allegedly violating a law barring federal employees from using their position to influence elections.

Jack Smith investigated for using position to influence elections

Montana authorities released a new surveillance image showing who they have identified as the suspect in a bar shooting in Anaconda. Meanwhile, nearly 2,000 miles away, police in Tennessee are searching for a quadruple homicide suspect.

Anaconda

Suspect on the run after Montana bar shooting

Los Angeles officials are praising an appeals court ruling limiting immigration stops, but the decision may only escalate a battle over transparency and control. Elise Preston has the latest information.

Los Angeles

Appeals court keeps restrictions on California ICE raids

Disturbing new video shows a severely malnourished Israeli hostage being held in what appears to be an underground tunnel. This comes as witnesses and aid workers say Israeli troops opened fire on hungry civilians at two Gaza food distribution sites.

Sderot

Hamas propaganda shows malnourished Israeli hostage

Donald Trump has ordered the repositioning of two United States nuclear submarines to “appropriate regions” relative to Russia, blaming a heated exchange with Dmitry Medvedev, Moscow’s military leader and former president.

Moscow

Trump sends nuclear submarines towards Russia

A mass shooting in Anaconda triggers community shock and concern, as witnesses share their experiences and the investigation unfolds amid rising tensions.

Community in shock following deadly shooting in Anaconda

U.S. President Donald Trump said he's ordered his administration to fire the commissioner of the U.S. Bureau of Labor Statistics, on the same day new data was released showing weak job growth in July. The Labor Department also sharply revised job growth for May and June down.

Trump orders firing of U.S. Bureau of Labor Statistics commissioner

U.S. President Donald Trump says he ordered two nuclear submarines to be positioned in the "appropriate regions" as a response to comments made by Russia's former president. CBS News' Charlie D'Agata reports.

Trump says nuclear submarines moved in response to Russia

Jeffrey Epstein accomplice Ghislaine Maxwell has been transferred to a Bryan, Texas, prison, CBS News confirms. Maxwell was previously held in Tallahassee, Florida.

Bryan

Ghislaine Maxwell transferred to Texas prison

The announcement comes as international pressure mounts on Israel over the war in Gaza and the deepening humanitarian crisis in the Palestinian enclave.

Ljubljana

Slovenia becomes first EU country to ban arms trade with Israel

The United States imposed sanctions on Palestinian Authority officials just as other nations are stressing the importance of the PA in governing Gaza in the event of an end to the devastating war in the enclave.

New York

U.S. sanctions Palestinian Authority in growing diplomatic rift

Ukraine’s Parliament has reversed a controversial law signed last week by President Volodymyr Zelenskyy, which would have allowed the government greater control over anti-corruption agencies. The decision comes as the country faces one of its most significant political crises since Russia’s full-scale invasion in 2022.

Ukraine parliament reverses bill on anti-corruption agencies amid crisis

U.S. President Donald Trump has signed an executive order increasing tariffs on Canadian goods that don't meet the terms of the Canada-U.S.-Mexico Agreement to 35 per cent.

Ottawa

Trump raises Canada tariff to 35%, grants extension to Mexico

U.S. special envoy Steve Witkoff met Israeli Prime Minister Benjamin Netanyahu on July 31 in a bid to salvage Gaza truce talks and tackle a humanitarian crisis in the enclave, where a global hunger monitor has warned that famine is unfolding.

Trump's envoy meets Netanyahu for Gaza aid, ceasefire push

U.S. special envoy Steve Witkoff is visiting Israel as more countries join the call to recognize a Palestinian state in September. CBS News' Robert Berger has the latest.

Trump envoy in Israel as Canada joins call on Palestinian statehood

President Donald Trump says the U.S. will charge a 15% tariff on imports from South Korea as part of a deal that eases, for now, tension with a top-10 trading partner and key Asian ally.

Swiss shares slump amid tariff shock

Breakdown

See The Full Story

Global Tariffs