(Reuters) – The valuation of European businesses has taken a hit due to US tariffs and a weakening dollar, affecting their performance in the second quarter. This has led some companies to consider relocating jobs to the US.
Recently, US President Donald Trump imposed a 39% tariff on Swiss businesses, prompting discussions about business operations in the context of the European Union and the UK, which are facing 15% and 10% tariffs, respectively.
This year, the euro and Swiss franc have appreciated by about 13%, while the British pound has risen roughly 8%, driven by uncertainties surrounding Trump’s policies and worries about rising US debt.
“When you look at the bigger picture, taxes and trade negotiations are key,” stated UBS equity strategist Staniya Chedda. “A lot of revenue miscalculations can be traced back to underestimating currency effects.”
After analyzing over 30 European companies’ performance for the second quarter, Reuters found that many cited tariffs and currency fluctuations as significant challenges.
Chedda and her team project that currency movements could lead to a 1.5% decline in revenue from developed markets in Europe this year compared to 2024.
Deutsche Telekom reported a revenue drop of around 400 million euros ($467.88 million) in the second quarter, primarily due to currency conversion issues, as the company significantly relies on its US operations through T-Mobile.
Meanwhile, companies like Dutch paint maker Akzo Nobel and Swiss freight carrier Kuehne + Nagel have both lowered their annual forecasts because of the currency impact.
To mitigate tariff exposure, several European firms, including luxury German car manufacturers, Swiss knife makers Victorinox, and Italian coffee brand Illycaffe, are considering shifting production to the US.
Additionally, some Swiss companies are exploring relocating operations within Europe to lessen their tariff burdens or exposure to the Swiss franc. YPSOMED, a Swiss medical technology firm, has hinted at possibly moving production to Germany to avoid tariffs.
Swiss banks facing high costs associated with the franc are also contemplating job relocations.
Julius Baer, a Swiss private bank, reported that its assets (AUM) experienced the negative effects of the Swiss franc, totaling 37.7 billion in the first half of 2025.
With 53% of its costs in francs, 14% in euros, and 52% of its AUM in dollars, the bank is managing inconsistencies by relocating certain operations to service centers in Spain and India, according to its CFO last month.
Meanwhile, wealth manager EFG International suggested that a 10% depreciation in the dollar exchange rate could lead to a 2.2% decline in July, potentially necessitating a shift in their cost base to support compensation structures.
Switzerland continues to negotiate with Washington in hopes of alleviating its tariff burdens. Amid ongoing uncertainty, certain companies like aircraft manufacturer Pilatus have decided to pause exports to the US.
($1 = 0.8549 Euro)
