What are the implications of Donald Trump’s landslide victory for Switzerland?

In his webinar for members of the CFA Society Switzerland on 23 October 2024, entitled ‘Why the US elections may not change the precarious situation in Europe’, the experienced macroeconomist Christian Takushi examined complex geopolitical issues that influence US foreign policy and thus also Europe. He emphasised the special nature of Europe’s stability and attributed its prosperity to military protection from the US, affordable Russian energy and competitive prices for goods from China.

thebroker talks to Christian Takushi, a macroeconomist and geopolitical strategist, a member of the CFA Institute and the Swiss Financial Analysts Association, who predicted Donald Trump’s recent victory.

In the webinar on 23 October, you predicted not only a victory for Donald Trump, but also Republican control of the Senate and House of Representatives (pending confirmation). What impact will this sweep have on transatlantic relations?

This US election is going to have a substantial and most likely negative impact on the transatlantic relationship between the United States and Europe. This relationship was already at its lowest point in its history before November 5th.

The clear mandate that President-elect Trump has received from the American people changes everything.  The problem for Europe is that our leaders are in denial about the precarious state of US-European relations and of our own geopolitical-economic predicament. Some of our leaders have been even sending mockery, warnings and ultimatums at Washington.    

Americans know by now that a large majority of European citizens and leaders abhor Trump and all the Americans that support him. Our leaders think that by sending a congratulatory message and celebrating our shared values, things will be fine. Not really. The truth is that US and European values are diverging.    

Over the past 10 years a growing number of Americans are kind of re-embracing their traditional family values and rejecting what they see as our woke-gender-green experiment here in Europe, something big US cities had also embraced.

We should pay attention: An overwhelming majority of Americans have said yes to a leaner state, unrestricted freedom of speech and the right to bear arms to defend that freedom of speech, while here in Europe only maybe 20% of voters would support that at the risk of less state-organized social security. The events this last summer already led many Americans to conclude that Europeans’ view of freedom of speech is much narrower than theirs.    

The values that we still share are precious, but they are compensated by the fact that we are increasingly competing with the United States politically and economically. Despite all the lip service to our friendship we are de facto becoming political and economic competitors and possibly foes. For many Americans Europe has become a free-rider military ally and annoying competitor.

Missed opportunity – Our reaction to the US elections was somewhat ill-considered and has done further damage to a fractured relationship. Americans are patriots and do not take kindly to an attack on their president. We may have spent the last few days vilifying Mr. Trump, but in fact we have taken on America. In 2016, we thought Americans don’t know what they’ve chosen – so our hostility towards President Trump was met with some degree of grace in America. But after Trump’s landslide victory on 5 November 2024, our hostility towards President-elect Trump is perceived as an affront to the US Senate, the House of Representatives and the American people. I have the feeling that our politicians know the east and west coasts and think they know America.

America will continue to play the game, because in the dire straits in which Europe finds itself, it is worth Washington’s while to stretch out NATO and the partnership.

What exactly made you predict Trump’s big victory?

We monitor trends over many years and run our own data analysis so that we don’t have to rely on the media and the polls in the election year. We have been observing a steady groundswell in support for traditional American values and less involvement in foreign wars – as envisioned by the Founding Fathers. Trump’s America First spoke to those undercurrents. Increasingly those people traveled and waited 8-15 hours just to see Trump, adding to the probability they would also turn out and vote. Harris had a brilliant August-September, but the democrats made big mistakes by shipping thousands of immigrants to battleground states, pushing court cases against Trump (made him a hero) and by Harris’ avoidance of unscripted interviews. Democrats tried to fix their mistakes with yet more celebrities and ads, and overlooked the groundswell even among Latinos and their conservative family values – Indeed 55% of Latino men voted for Trump. Finally democrats told people how great the economy was, which is true for GDP and corporations, but not for middle class Americans. They are struggling to make ends meet due to a sharp increase in the cost of living. People wanted to go back to Trump’s America. Unlike 2016 this election was about discerning what “coalition” would come together and effectively be motivated to vote. Those that drove by themselves 9 hours both ways to attend a Trump rally were more motivated on November 5^th than the many women that were always bussed around to a Harris rally with a free celebrity show. Many of those women didn’t show up to vote. What bit of the final Trump coalition did I miss? Those who disliked both candidates would vote for Trump in a big way.

While we expected the Republicans to win the White House, the Senate and the House of Representatives (red or clean sweep), I was surprised by the majority in the popular vote – it was huge and remember Republicans don’t win the popular vote, not by 4.700.000! This was a massive landslide. Washington is still in shock.

Every election is different – Back in 2016 the groundswell was still young and had some overlaps with the tea party movement that was fading away. In 2015-2016 many Americans joined the movement, because they sympathized with Trump speaking out against Washington and breaking with the political correctness. What really helped Trump was the massive pressure the media deployed to lead people not to vote for him. That really backfired. Back in 2016 the groundswell was always underestimated and the polls lower than our estimates, which helped us stay confident he’d surprise months before election day. 2016 was more of a numeric modeling effort.

How did Robert F. Kennedy Jr, Elon Musk and JD Vance help?

This will be hard to quantify, but I am convinced that their support was decisive. To have Tulsi Gabbard and Robert F. Kennedy leave the Democratic Party saying the Dems are now the party of big money & censorship to join the Trump movement was big. When Elon Musk threw his whole weight risking his businesses and fortune at it, independents and young people began to join the Trump movement. What Elon Musk & Co told about Trump simply didn’t match what the press was showing them. Musk and Vivek made it “cool” for young people to dare being conservative. But Trump’s biggest coup was to choose JD Vance as a running mate. JD Vance encapsulates the American Dream like no other in recent US presidential race history – born into a poor and dysfunctional family in one of the most hopeless regions of America, Vance served in the Marines in Iraq, learnt to study hard, found his future wife at law school (with him being the poor one), experienced rejection by upper class lawyers and made it finally big. Every time Vice President Harris would later brag about how she grew up in the middle class to be more relatable to struggling Americans, ironically she only highlighted Vance’s relatability.

Yes, I also believe that in the final stretch your companions matter – This is where I think the Democrats let down Mrs. Harris to fight it almost all alone – something they would amend somewhat late in the race. Even CNN kind of dropped her. Her only real fully committed team member Walz became quickly a drag on her campaign by his boastings. Then again he was her choice. Trump had companions that were totally committed to Trump’s cause. Most notably Mr. Musk.

To what extent does it affect the Swiss financial industry?

The Swiss financial industry highly depends on the political, economic and security stability of our country, which in turn allow us to maintain our neutrality. Unfortunately these supporting pilars could collapse if the European economy continues to falter or NATO dragged into a war with Russia, Iran, North Korea or China.

Switzerland is in the middle of Europe and Europe is in deep trouble, because of the many mistakes that the EU has made over the past 25 years. The European Union has maneuvered itself into a massive geopolitical, macroeconomic and security trap. Our leaders lacked strategic foresight – unaware that the Northern hemisphere would host 120 conflicts by 2024.

The deterioration of the transatlantic relationship between the United States and Europe only exacerbates our predicament, because Europe is already on collision course with Russia and China. Europe looks geopolitically unaware that facing a potential war with its dismantled armed forces makes it is an unequal and risky partner in any alliance. Switzerland made the huge strategic mistake to bind itself to a defenseless and overregulated economic bloc (EU) via sticky Bilateral Agreements.  The UK or USA would have been much better powers to be bound to  – they can defend themselves and extend their powerful nuclear deterrence as a protective shield over Switzerland. This is the big achilles heel of our Swiss financial industry. The EU was a great business model only as long as peace and cheap energy was guaranteed for her.

On top of this there is an effect many underestimate: whenever an Anglosaxon country rejects our European values Swiss voters are more willing to yield to the EU for the sake of European unity. I noticed it after Brexit, Trump 2016 and Trump 2024. The Swiss politicians who bravely resisted the pressure from the EU for two years saying „Forcing EU courts on us is ridiculous“, are now saying „let’s move closer to the EU“.

Swiss financial firms have taken security in Europe for granted. By the time Bern signed the Bilateral Agreements we knew the EU was defenseless. By 2013 Swiss financial firms should have begun to diversify and building bridges to other safe havens around the world with less geopolitical risks than Switzerland. Now wealthy clients are increasingly going elsewhere.

As I have been warning since 2016 I think that the Swiss financial industry is in a state of denial about the risks and threats that it faces. The time to take precautionary measures is running out. Few investors and financial firms have diversified strategically into the USA and dynamic young economies with healthy fiscal finances along the Southern hemisphere. The emerging economies of Latin America and South East Asia would have been ideal targets.

During his first term in office from 2016, Trump was able to learn a lot. Should we expect a rapid implementation of his policies with reshuffles at the FBI, among federal prosecutors, a reorganisation of the government apparatus, etc.?

Yes, this time around Trump has surrounded himself with a team of capable people that are bent on avoiding the mistakes of his first administration. In 2016 most Washington institutions, judges and Trump’s own appointees would frustrate or sabotage the President’s orders – using leaks if necessary. The choice of his chief of staff shows already how much Trump has learnt.  Susie Wiles was probably the first political strategist to believe in Trump and to commit to make him president – Susie, she trusts no one, less so anyone charming Trump with compliments in exchange for a job.

There are some Trump allies that demand retribution for the “persecution” they suffered and that the President cleans up key agencies of all politicized opponents. Our independent analysis points to Trump having a more competitive and conciliatory view on this. Trump is used to New York’s real estate business being tough. With all that has come up to the surface in recent years, I think Trump will limit this to those officials that knowingly misled the American people and that abused their powers to force censorship upon the political opposition. Before the attempted assassination maybe Trump might have given into retribution, but I sense that coming so close to death has had a deep impact on the now President-elect to want to “use the extra-time God has graciously given him wisely” as some close to him have said. The next President Trump wants to go only as far as it is necessary to keep the agencies working or a Truth Commission demands. As long as crimes were not committed and the work is done, he doesn’t mind democrats since he’s been one himself. Trump likes challenges and he thrives on them.

Nevertheless, it is worthwhile mentioning that some key figures in the Trump Team cautiously disagree – they see the necessity of a much more dynamic approach to depend on the amount of sabotage and resistance that agencies will offer. They got wind in their sails this last weekend as high ranking Pentagon officials held meetings to prepare – what seems to be a containment strategy – for the new administration.

Looking at the appointed Chief of Staff, whom I see as a „tough“ Chief Operating Officer, we should not rule out a very dynamic approach regarding this issue. I am sure of one thing, with the massive mandate Trump has been given in 2024 – his Chief of Staff is going to be ruthless with officials bent on sabotaging the implementation of this mandate.

Are the drastic tariffs on products from China and the EU that have been announced, as well as a renewed transatlantic trade war, to be expected?

Yes, President elect Trump is expected to use tariffs extensively. But in three stages: Threat, negotiation, implementation. All three stage form a loop, which can be re-started. The Trump team has been working on a new economic model that has been used in the United States once in the past. It is a model that relies on tariffs on imported products in order to free the American people from having to pay income tax.
Most economists have been trained to dislike tariffs for good reasons, but those theories often assume peaceful relations – the fact is that we have entered a period of hostilities. The modern use of tariffs by the Trump team is a sophisticated multi-purpose tool or geopolitical weapon: It helps implement several promises around the America First platform: (a) helping American families keep more of their money, (b) help reduce the US trade deficit, (c) pushing back on foreign powers – shielding America just as the Founding Fathers envisioned, (d) deploying an assertive Foreign Policy & Trade Policy Mix, (e) finally this plays into his strength as tough negotiator and deal maker forcing key departments to work in lockstep with his chief of staff.  

The Trump team has chosen this tool, because it sees America as entering a period of tough geopolitical & economic competition with China, Russia, Europe and the BRICS.

The tariffs will be used in a flexible manner to give countries incentives to work with America. They want to attract developing and emerging markets to work closely with the USA and not to align themselves too much with China via the BRICS bloc.  

I expect tariffs to be lower in the end than what Trump is pre-announcing, but I also expect President Trump to be very harsh and assertive in the use of tariffs in case a country dares to challenge the USA or is found taking advantage of it.

Trump repeatedly said during the election campaign that there would be no conflicts during his term in office. What will happen in Ukraine and the Middle East?

No one can guarantee what other nations can do or not, but I see very clearly in many non-Western capitals the fear or dread of a President Trump. Even in the West. It is not what many want to hear in Europe, but the fastest way to contain the 120 conflicts that are raging in the Northern hemisphere alone is to get Trump in the White House. But this doesn’t mean people will get justice though.

Trump disagreed with the expansion of the EU and NATO into the former buffer zone, but on the other hand he recognizes the US and Russia are already in a proxy war. A dangerous one, because in his time in the Oval Office he learnt that several Eastern European countries have a lot to gain from it and much to lose from an end of it. If this is not settled soon, Russia and America could be at war with one another.  Being Russia a nuclear power, Ukraine on the retreat and facing its possible collapse this winter, it will be hard to ask Moscow to give up the land it has gained. De facto Russia might be keeping Eastern lands that more or less used to be habitated by Russian speaking peoples in exchange for security guarantees for Ukraine. The EU is going to be de facto humiliated by this deal and also seen as having promised things to Kiev it was not in the position to deliver.  

In the Middle East Trump personally believes Israel faces a daunting task, because the Arab side is ultimately not going to be happy with land or peace. What Trump learnt during his first term is that what the Arabs really want is the end of a Jewish state – unless the Jewish state can make them wealthy. This was at the heart of the Trump-Kushner plan. Having said that, Trump believes Israel needs to finish the offensive sooner than Israel wants, because the civilian casualties are mounting and adding to the security threats elsewhere. Trump would like to start with the full restoration of Lebanon’s territorial integrity. Maybe a role for Paris to play here. In Gaza and what the Israelis call ancient Judea & Samaria and the UN calls Westbank, Trump wants Arab nations to help secure a functioning Palestinian government. But no Arab nation is keen to get too involved – they are happy to help the Palestine cause, give money, but ironically they are afraid of Palestinians destabilizing their nations – as happened in Jordan. Trump doesn’t want Israel to destroy Iran. Instead the USA will constrain Iran economically, containing Teheran’s ability to wage war and rebuild its proxy armies. Netanyahu is upset about this, but he will have to accept Trump’s deal and finish operations way before January 20th. Trump doesn’t like the Ayatollahs, but he dislikes even more the idea of Washington removing foreign regimes, because what has normally followed has been far worse.  

In both theatres a Peace Deal is going to leave many people unhappy. As usual people want everything and will only appreciate the peace when the economies and lives flourish again. Trump hopes that the cessation of hostilities will give way for trade and that the business exchange will organically open ways for a more lasting peace arrangement.

At this juncture this is our assessment of what Trump intends to do: In both theatres there will be a reduction or cessation of hostilities within weeks if not days. There will be what I call imposed Peace Deals rather than permanent peace settlements. The latter assumes one side completely destroys its enemy or every side is happy or has received justice, but the Trump team does not believe totally destroying your enemy is feasible nor that absolute justice is possible, because the views and perceptions of both sides are completely irreconcilable.

Although Trump did not say he wanted to leave NATO, he could still do so. Will he make it dependent on the payment of the defaulting states, which do not yet pay the two percent of GDP for defence?

The United States of America is building a new Global Military Alliance, a superb one called AUKUS, made of nuclear armed nations with strong militaries. It has the US-UK as axis and at its core Anglosaxon forces. It has been joined by Australia – as it has committed to build a nuclear submarine force to match Britain’s. Only countries with well-equipped armies will be allowed to join – The main criteria is “No free riders, like in NATO”.  The fact that only the strongest European military power (UK) has been invited to join this new Global Military Alliance by the USA speaks volumes.

De facto NATO is being partially replaced and downgraded as a priority by the USA. Trump doesn’t have to leave NATO. To keep a dysfunctional NATO with many free riders serves certain US interests, binds Russia and projects power. NATO exists, but it is weaker than what it was 10 or 20 years ago. There has been more spending in the military in the last two years, but the divisions and the distrust between its members have reached unprecedented levels. In the eyes of Washington military circles, to talk with the EU about defense is a bit pointless. Even after the invasion of Ukraine, Europeans think that by reaching 2% of GDP in military spending, they will be safe. This is the mentality Washington facies – long before the war in Ukraine the USA, UK and Australia sat down to brainstorm their defense plans for the wars of this century. The resources Britain and America deploy to assess future threats put them in a league of their own and have led them to renew their deterrents. The EU’s problem is not really investing 2% of GDP into defense, it is its utter lack of strategic foresight and geopolitical mindset in a highly perilous time.

In contrast to the Continental European bureaucratic view of defense, the UK begun investing some ten years ago into a massive and costly renewal of its nuclear submarine deterrence. Thanks to CASD, Continuous At Sea Deterrent, Britain has at least one nuclear armed submarine always deployed 24-7 at a secret location to attack or avenge any enemy. The UK possesses one of the most formidable nuclear deterrents. Only Russia and the USA have such a credible submarine deterrent. It’s feared, so it does its job. Most importantly, having fought 120 wars on 170 countries in the last 300 years, no country doubts the British will use it. If necessary. We are talking about a massive UK strategic submarine budget supporting 42’000 jobs and 2’500 companies. Not to speak of defense technology. It gives Britain a seat at the table to shape the international order. I never understood how the EU didn’t realize how much it would need the UK military in the future. Before 2020 Brussels said the UK needs the EU, not vice versa – It overlooked defense of course. NATO is the USA, UK and a pretty defenseless EU bloc. Some EU militaries are impressive, but they are small or conventional.

You invest into your defense as much as necessary, because everything else depends on you deterring other powers so you can keep the peace. Currently the level of spending necessary is not 2% but 3%. America didn’t enforce it, because 2% has proved quite illusory in Europe already.

The stock market is talking about a ‘red sweep’ by the Republicans. What impact will the election have on the stock markets, small caps and the dollar and bitcoin of the ‘crypto president’ Trump?

It will have a positive effect – the US economy should get a big boost. However, this will partly be at the expense of other countries. Since certain countermeasures by the EU, China and BRICS are to be feared, small caps could be safer. Many strategies have been negative on the USD, but I feel it will surprise on the upside. The USD is likely to benefit from assertive foreign & economic US policies and the expected economic boost. Higher deficits at the beginning will keep rates high and also support the USD. With Trump supporting BITCOIN especially, the crypto realm will get a strong boost. Gold and Silver are likely to consolidate initially, but trade frictions will keep inflation alive and deficits high, thus gold is likely to come back mid term.   

What about oil production? In his victory speech, he promised to produce more oil than Saudi Arabia and Russia.

Yes, this is very possible. Trump is likely to unleash more oil and gas production in order to boost regional economies he promised to support on the campaign train. This will also help flood America with cheap energy in order to compensate for the tariffs effect on consumer prices. The Trump team wants to attract American, European and Asian firms back to the USA homeland with rock-bottom energy prices and a growing economy. Oil prices are thus expected to be soft until we know how much the US can add to its oil & gas production. This has also a geopolitical-military perspective: Trump team knows the world has entered a perilous period, so it would like to make America as energy self-sufficient as possible. In case of tensions, embargos or war energy is key.  

Christian R. Takushi MA UZH is a Macroeconomist and Geopolitical Strategist with 34 years of experience as a researcher, fund manager and strategist in the investment industry. He has predicted major political and economic events (including the CHF breakout in 2011, the CHF-EUR peg collapse in 2014, Brexit, Trump 2016 & 2024, blockade of European maritime trade routes, return of wars). As geopolitical economist with expertise on Asia, the Middle East and Latin America he advises governments, central banks, companies, pension funds and asset managers. 

Master in Macroeconomics – Member of the CFA Institute & Swiss Financial Analysts Association.

Read also: Navigating Global Turbulence: Insights from Christian Takushi’s Webinar