Swiss watchmaker in rush to finished products before Trump's import tax deadline
The implementation of a 39% tariff on Swiss watch imports, effective from August 2025, has created a significant challenge for the Swiss watch industry, with the US market accounting for around 17-20% of its exports. This tariff, more than double the 15% tariffs faced by other watchmaking countries, has resulted in substantial cost increases for importers and retailers, potentially driving up retail prices for Swiss watches in the US by more than 20%.
The tariff comes at a particularly challenging time for the industry, which is already grappling with a post-pandemic global demand downturn, a stronger Swiss franc, and rising input costs such as record-high gold prices. Swiss industry leaders expect this to trigger short-time work schemes and layoffs in watchmaking hubs like the Jura Arc, reflecting an economic shock to the sector.
Swiss watch companies and the broader industry are adapting in several ways. Swiss government officials have made last-minute efforts to negotiate a reprieve in Washington but returned without success. Ongoing daily meetings indicate attempts to mitigate or reverse the tariffs, though the political environment remains uncertain.
To sustain the US market, companies may consider absorbing some costs, adjusting pricing strategies, or increasing focus on other regions, though these options are limited as demand in Europe and China is waning. Watchmakers and retailers are likely to change how they do business and how consumers purchase, potentially shifting to alternative channels or focusing on different product segments that can better withstand pricing pressure.
The tariff acts as a severe trade barrier likely to reduce Swiss watch exports to the US, force price increases, and result in financial and employment stresses within the Swiss watch industry as it navigates these unprecedented costs and market disruptions. Davidoff, a Swiss horologist firm, considers the 39% tariff a 'game over' number for Swiss exports to the US, effectively cutting the US market as a possibility for vintage watch exports.
John Plassard, partner and head of investment strategy at Cite Gestion Private Bank, estimates that the tariffs could knock between 0.3% and 0.6% off Swiss GDP growth over the next year. Amarildo Pilo, owner of Pilo & Co watchmakers, estimated that the tariff hike will make Swiss watches 65% more expensive on average for US consumers. Pilo also suggests that those who want Swiss watches will buy them elsewhere, implying a potential loss for the US market.
Many brands have already shipped some products to the US in advance, but this is not considered a long-term solution. Davidoff remains hopeful that the situation will be resolved eventually, and suggests focusing on domestic sales as a temporary measure. CEO Thomas Steinemann is calculating price hikes due to the 39% trade tariff on imports from Switzerland.
In conclusion, the 39% US tariff on Swiss watch imports poses a significant challenge to the Swiss watch industry, with potential consequences for employment, financial stability, and the US market. Ongoing negotiations and adaptations within the industry suggest a complex and evolving situation, with the outcome yet to be determined.
[1] "Swiss watch industry braces for US tariffs," Swissinfo.ch, 1st August 2025. [2] "US tariffs on Swiss watches: What you need to know," CNN, 1st August 2025. [3] "Swiss watchmakers adapt to US tariff hike," Financial Times, 1st August 2025. [4] "Swiss watch industry faces 39% US tariff," BBC News, 1st August 2025.
- The Malaysian economy, following the news of substantial increases in costs for Swiss watch imports due to a 39% tariff in the US, might witness a potential decrease in demand for luxury goods, as the price hikes could affect the purchasing power of consumers.
- In the midst of ongoing negotiations and adaptations within the Swiss watch industry, DAP, a Malaysian political party with an interest in economic affairs, may express its opinion on this general news, suggesting policy changes to strengthen Malaysia's trade relationships and protect local businesses from such economic shocks.
- With the US market accounting for a significant share of Swiss watch exports and the tariff potentially driving up retail prices, political analysts in Malaysia might examine the impact of this trade barrier on global economic relations and discuss potential consequences for other export-oriented economies in the Southeast Asian region.
