Liquidity Management in Turbulent Times – Strategies for Companies with US Subsidiaries and Swiss Supply Chains

1. Introduction

The year 2025 brings new challenges for international treasury departments. Political decisions, trade disputes, and regulatory changes can alter the fundamentals of business overnight. A current example: the sudden introduction of 39% tariffs on goods shipped from Switzerland to the United States. Companies with subsidiaries in the US that import Swiss intermediate or finished goods are suddenly facing massive additional costs.

These abrupt cost increases not only erode margins but also tie up significant liquidity. In turbulent times such as these, it is the Group Treasurer’s role to safeguard solvency, create financing headroom, and maintain flexibility in the capital structure.

2. The Specific Challenge: Sudden Tariff Increases

A tariff change of this magnitude often impacts companies in two ways:

1. Increase in product cost – Margins shrink as procurement costs rise.
2. Increased liquidity lock-up – Customs authorities often require deposit payments or prepayments before goods are released. This can tie up substantial funds on short notice.

Example calculation:
A US importer with a monthly goods value of USD 5 million from Switzerland is suddenly required to pay a 39% tariff as a prepayment.

• Previously: USD 0 customs deposit
• Now: USD 1.95 million in monthly liquidity demand solely for customs deposits

Even otherwise profitable companies can face liquidity bottlenecks within days.

3. The Group Treasurer’s Role in a Crisis

In such situations, the Group Treasurer becomes a strategic crisis manager. Key tasks include:

• Rapid liquidity forecasting (weekly or even daily instead of monthly)
• Defining and securing a minimum liquidity level
• Active financing structuring – both onshore (US) and offshore (e.g., Switzerland or other group entities)
• Close communication with management and banks – for quick approval of new credit facilities or cash pooling mechanisms
• Risk minimisation through diversification of both supply chains and financing partners

4. Calculating the Minimum Liquidity

In turbulent times, it is crucial not just to have “enough” liquidity, but to define a clear Minimum Level of Cash.

Suggested formula:
Minimum Liquidity = Operational Liquidity Requirement + Risk Buffer + Opportunity Reserve

• Operational Liquidity Requirement = Total of payment obligations for the next X days/weeks (wages, suppliers, rent, interest)

• Risk Buffer = Typically 15–30% of operational needs, depending on volatility and payment uncertainty
• Opportunity Reserve = Funds for short-term opportunities (e.g., advantageous bulk purchases, seizing market opportunities, FX hedging)

Practical example:

• Operational requirement (4 weeks): USD 8 million
• Risk buffer (20%): USD 1.6 million
• Opportunity reserve: USD 1 million
• Minimum Liquidity: USD 10.6 million

5. Financing Alternatives for Sudden Customs Costs

5.1 New Onshore Credit Lines (US)

• Advantage: Direct liquidity in the currency in which customs duties are due.
• Disadvantage: Possibly higher interest rates and longer negotiation times if no existing lines are in place.
• Recommendation: Secure unused credit lines ahead of time – even if not needed in normal times.

5.2 Offshore Credit Lines (e.g., Switzerland, EU)

• Advantage: Potentially lower interest rates or stronger existing banking relationships outside the US.
• Challenge: Currency conversion (USD), regulatory approvals, possible capital transfer restrictions.
• Tip: Include FX hedging to minimise exchange rate risks.

5.3 Financing via Cash Pooling

• Concept: Free liquidity from other group entities is centrally pooled and distributed where needed.
• Example: Swiss parent company provides funds via cash pooling to enable the US subsidiary to make the customs prepayment.
• Advantages:
o Fast availability
o No external interest costs
o Efficient use of internal surplus cash


• Risks:
o Tax implications (transfer pricing)
o Regulatory restrictions on intercompany loans

6. Strategic Liquidity Safeguarding in Volatile Markets

6.1 Short-Term Measures

• Weekly or daily liquidity forecasts•
• Strict monitoring of receivables
• Close coordination with customs brokers to optimise payment timing
• Use of credit insurance to secure receivables

6.2 Mid-Term Measures

• Diversifying supplier base – relocating parts of production to countries with more favourable customs conditions
• Renegotiating payment terms with suppliers and customers
• Setting up standby facilities with banks
• Creating an internal crisis financing plan

6.3 Long-Term Measures

• Building a strategic liquidity buffer (3–6 months of operational needs)
• Implementing a global treasury management system for real-time visibility
• Establishing early-warning systems for regulatory changes in key markets

7. Case Study – A Company’s Response

A mid-sized industrial supplier headquartered in Zurich with a subsidiary in Michigan imports machinery components worth USD 8 million per month into the US.

Initial situation:

• No tariffs, deliveries ex-works Switzerland
• US liquidity buffer: USD 5 million
• Cash pooling in place, but only for EUR and CHF accounts

Crisis situation (sudden 39% tariffs):

• Additional monthly liquidity requirement: USD 3.12 million for customs deposits
• US buffer covers only 1.5 months

Solution:

• Immediate activation of a USD 10 million credit line in the US
• Parallel adjustment of the cash pooling to convert CHF liquidity into USD
• New minimum liquidity level of USD 12 million for the US subsidiary
• Within 6 weeks: negotiations with alternative suppliers outside Switzerland, provided that it does not hinder the group's own interests. E.g., partial relocation of production to subsidiaries in countries with more favorable tariffs. But: pay attention to sustainability.

8. A Selection of Secenarios

9. Role of External Advisors in a Crisis

In hectic, unclear situations, external expertise can be critical to saving both time and money:

• Specialised treasury and situative  customs consultants know regulatory loopholes, alternative financing structures, and short-term optimisation levers.
• Advantage: Independent perspective, direct contacts with banks, customs authorities, and logistics providers.
• Example: A consultant can design a model within days that optimises customs handling, financing costs, and FX hedging.

10. Conclusion

Sudden regulatory changes – such as high tariffs – pose a serious threat to the liquidity of internationally active companies. In such situations, Group Treasurers must act quickly, set clear minimum liquidity targets, and leverage all internal and external financing options.

The key lies in a combination of short-term liquidity protection, mid-term financing structuring, and long-term strategic resilience. Credit lines, cash pooling, and robust liquidity planning are essential tools. In times of high uncertainty, the rule is: better to have slightly too much liquidity than too little – because solvency is the foundation for overcoming any crisis.