US gold bar tariffs rattle Swiss trade; BoE hawkish cut supports sterling

US reclassifies gold bars, triggering market shock

The US Customs and Border Protection agency has ruled that one-kilo and 100-ounce gold bars—key formats traded on the Comex futures market—will now be classified under code 7108.13.5500, which is subject to import levies. The ruling, issued on July 31, sharply contrasts with industry expectations that such bars would qualify for the tariff-exempt classification code 7108.12.10.

The decision is significant because one-kilo bars make up the majority of Switzerland’s bullion exports to the United States. These smaller bars are preferred in the US market, whereas London deals primarily in 400-ounce bars, which are then sent to Swiss refineries for recasting. With tariffs now applying to these shipments, the established gold trade route—London to Switzerland to New York—faces disruption.

Switzerland exported $61.5 billion worth of gold to the US over the past 12 months. At the newly imposed 39% tariff rate, this flow could incur an additional $24 billion in duties, a cost that industry officials say will likely be passed along to buyers. Christoph Wild, president of the Swiss Association of Manufacturers and Traders of Precious Metals, warned that the ruling was “another blow” to the Swiss gold trade and could severely constrain US market supply.

Several Swiss refineries have already reduced or suspended shipments pending legal clarification. Some traders recall the rush earlier this year to stockpile gold in the US ahead of Trump’s “liberation day” tariffs—a move that temporarily created shortages in London. This time, however, the scale of the levies and the uncertainty over exemptions may keep market volatility elevated for longer.

Swiss diplomacy falters as 39% tariff takes hold

The gold bar ruling compounds an already challenging backdrop for Swiss exporters. Switzerland’s 39% blanket tariff from the US—one of the highest in Trump’s “reciprocal tariff” policy—officially took effect last week. Swiss President Karin Keller-Sutter described the situation as “extraordinarily difficult” and warned that the levies could erase US market access for certain manufacturers entirely.

Despite intensive last-minute negotiations, no compromise was reached before the tariff deadline. Talks are still underway behind closed doors, with Swiss officials offering fresh concessions in hopes of securing relief. Economists estimate the tariffs could trim 0.3% to 0.6% from Swiss GDP over the coming year, with the luxury goods, machinery, and precision instruments sectors also feeling the pinch alongside gold.

Japan secures tariff correction from Washington

In contrast to Switzerland’s struggles, Japan managed to resolve a tariff dispute with the US this week. Tokyo’s lead negotiator, Ryosei Akazawa, said American officials acknowledged a “regrettable error” in applying double duties on certain Japanese imports. As part of the correction, the auto tariff will be reduced to 15%—the rate agreed under the US–Japan trade deal reached last month—and duties collected since August 7 will be refunded.

The resolution offers Japanese exporters some relief and may serve as a precedent for other countries contesting tariff measures. The move also underscores that, while Trump’s trade policy remains aggressive, there is room for bilateral fixes when diplomatic channels are used effectively.

Sterling holds gains after BoE’s “hawkish cut”

On the currency front, Sterling remains the strongest major currency this week after the Bank of England delivered a 25bps cut to its benchmark rate, lowering it from 4.25% to 4.00%. The decision was widely expected, but the Monetary Policy Committee’s accompanying message was far from dovish. Policymakers emphasized that any further easing would be “gradual and careful,” citing persistent inflationary pressures, especially in food prices, and higher-than-expected CPI data from last month.

The MPC vote split is expected to show several members favoring no change, highlighting internal caution. Recent payroll revisions suggest the UK labor market is cooling more slowly than anticipated, which could temper expectations for aggressive follow-up cuts.

Market focus now turns to BoE Chief Economist Huw Pill’s speech later today, where traders hope to glean insights into whether a November cut is likely or if the bank will skip a quarter in its easing cycle. A more hawkish tone could extend Sterling’s outperformance, particularly against the Euro and Swiss Franc, both weighed down by weaker economic backdrops.

Trump nominates CEA chair Stephen Miran to Federal Reserve board

President Trump said Thursday that he would nominate Stephen Miran, current chair of the president's Council of Economic Advisers, to the Federal Reserve Board of Governors.

Miran will replace outgoing governor Adriana Kugler, who is set to step down on Friday. Miran's term will run until Jan. 31, 2026.

Kugler unexpectedly announced last week that she would step down from the Fed's Board of Governors, just under six months before her term was set to expire on Jan. 31, 2026. Kugler, who has served as a Fed governor since Sept. 13, 2023, will return to Georgetown University as a professor this fall.

Miran's appointment will add not only a Trump administration official to the Fed board, but also likely another member who is in favor of the central bank cutting interest rates as soon as its September policy meeting.