Tariffs and trade conflicts become the biggest political risk
Tariffs, trade conflicts and regulatory volatility are now among the biggest political risks. Switzerland is particularly exposed as a small, open economy with a high dependency on exports. Three quarters of companies in Switzerland, Germany and Austria are already reconsidering their location decisions. These are the conclusions of the latest Political Risk Survey by Willis, a division of WTW.
Today, globally active companies are under more pressure from trade policy measures, regulatory volatility and political polarization than from armed conflicts. The strategic decoupling between the USA and Europe is also particularly relevant for Switzerland. US policy is clearly leaving its mark. When asked about the current risks to business activity, 61% reported specific financial losses due to tariffs - more than previously due to the war in Ukraine. This is shown by the ninth Political Risk Survey by Willis and Oxford Analytica, for which managers of global corporations from Europe, North America and Asia were surveyed.
Switzerland is particularly exposed here: a small, very open economy with a strong currency and limited ability to absorb external shocks or take countermeasures. The mechanism described in the report - the diversion of Chinese and US goods into a «more crowded» European market - affects Switzerland directly, as it acts there as a price taker without access to the EU's trade protection instruments.
«Whereas we used to look to distant crisis regions, political risks have now moved to domestic markets. As a result, companies are much more exposed to global risks,» says Kilian Manz, Head of Corporate Risk & Broking Switzerland at Willis. «The drifting apart of the USA and Europe is putting Swiss companies in the pharmaceutical, mechanical engineering and financial services sectors in particular under pressure. As a non-member of the EU, Switzerland has a weaker negotiating position vis-à-vis the US, its largest single export market.»
Three quarters of DACH companies reconsider location
Global developments are reflected in the survey results: 50% of DACH companies consider US-EU trade and industrial policy to be their greatest risk. Added to this are the EU's regulatory volatility, for example with regard to reporting obligations and sustainability rules (42%), as well as trade policy differences between China and the EU (33%).
As a result, 83% of participants in the DACH region are struggling with increasing compliance, reporting and audit costs. «Swiss companies now have to constantly monitor developments regarding export conditions, customs duties and possible sanctions,» says Lasse Breede, Head of Trade Credit and Trade Finance Switzerland at Willis. «As this is no longer only necessary for individual emerging countries, they are clearly feeling the additional workload and planning uncertainty.»
These risks have an impact on specific business decisions: Three out of four DACH companies state that location decisions - i.e. whether and where to relocate operations - are the most affected business decision. This is the highest figure of all the regions surveyed worldwide. Lasse Breede: «In this environment, political analysis becomes a real competitive advantage: a company that recognizes national trends and international risks earlier makes complex political developments manageable. This strengthens its strategic ability to act.»
Switzerland as a potential target for „gray zone attacks“
In addition to tariffs and trade conflicts (61%), the global respondents rate political polarization within countries (47%) and so-called «grey zone attacks» such as economic coercion, cyberattacks or attacks on critical infrastructure (42%) as particularly difficult to manage (Fig. 2).
Switzerland's exposure to the latter is particularly important: it is integrated into European energy, logistics, data cable and financial infrastructures, i.e. precisely those areas that are the preferred targets of such attacks. «Neutrality offers no protection against hybrid threats or indirect effects. In addition, its role as a financial and commodities trading center makes Switzerland a potential target for pressure measures and sanctions conflicts,» says Lasse Breede. «Gray zone attacks in particular defy traditional risk categories. The threat develops gradually, which makes it difficult for companies to manage and insure against.»
Economic losses at second-highest level
In 2026, 75% of the companies surveyed recorded financial losses due to the numerous geopolitical or trade policy disruptions - the highest figure after 2023. The most common types include supply chain disruptions (49%), trade and sanctions measures as well as currency and payment restrictions (Fig. 3).
As losses increase, so does the importance of risk transfer: the use of political risk insurance rose to 28% in 2026, compared to 18% in the previous year. At the same time, 35% of companies use trade credit insurance specifically to hedge against geopolitical payment defaults - more than twice as many as in the previous year.
«The unpredictability continues to increase for globally active companies. They need to prepare strategically for the consequences of political risks - today, not just when the situation worsens,» warns Kilian Manz. It is essential to build up a broad-based supplier network in order to reduce dependencies, scrutinize their own locations and supply chains and adequately secure particularly exposed parts of the value chain.
Source: WTW
This article originally appeared on m-q.ch - https://www.m-q.ch/de/zoelle-und-handelskonflikte-werden-zum-groessten-politischen-risiko/
