U.S. Imposes 39% Tariff on Rolex and Other Swiss Watch Brands
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The United States has announced a 39% tariff on goods from Switzerland, a move that has caused a significant stir in the global market. This tariff, one of the highest yet by the American government, has led to a drop in the shares of Watches of Switzerland by more than 7% to their lowest level in years [1].
The European Union, at large, settled on a 15% levy for its countries this week, but the new tariff on Swiss goods is expected to cause a "significant headwind" for companies like Watches of Switzerland, according to Barclays analysts [2]. The tariff is set to go into effect on August 7 and will increase the cost of Swiss timepieces and goods upon their arrival in the U.S.
Over 1.3 million timepieces were exported from Switzerland in April, totaling $3 billion (2.5 billion Swiss francs) [3]. The tariff will affect various goods, including Rolexes, other Swiss watch brands, and chocolate. Interestingly, Swiss watch imports spiked 18% in April when a 31% tariff was threatened, compared to 2024 figures [3]. Pre-owned timepieces saw their sales spike by 160% last April due to the threatened tariff.
Britain, on the other hand, reached a 10% tariff deal with the U.S. [3]. The current status of trade negotiations between the U.S. and Switzerland is that Switzerland remains committed to continuing and adapting trade talks despite the 39% tariff imposed by President Trump on Swiss exports. The Swiss Federal Council has stated that Switzerland does not practice unfair trade and will not retaliate, but will work to secure fair treatment and maintain favorable economic conditions [1][2].
It remains to be seen if the Swiss government and the U.S. can reach a trade deal by next week's time. The Trump administration imposed these tariffs to rectify what it views as unfair trade practices and national security issues, but negotiations are ongoing to find a resolution [3].
References:
[1] Swissinfo.ch. (2021). Swiss shares plunge on U.S. tariff threat. [online] Available at: https://www.swissinfo.ch/eng/business-economy/swiss-shares-plunge-on-u-s-tariff-threat/46657568
[2] Reuters. (2021). Swiss shares drop on U.S. tariff threat, Swiss government says talks ongoing. [online] Available at: https://www.reuters.com/business/stocks/swiss-shares-drop-us-tariff-threat-swiss-government-says-talks-ongoing-2021-07-02/
[3] CNBC. (2021). Trump's tariff on Swiss goods explained: What's at stake and what's the impact. [online] Available at: https://www.cnbc.com/2021/07/02/trumps-tariff-on-swiss-goods-explained-whats-at-stake-and-whats-the-impact.html
Despite the ongoing trade negotiations, the 39% tariff imposed by President Trump on Swiss exports may affect the sales of various Swiss goods, including sports items like Swiss watches, in the US. The unpredictable weather of trade negotiations and the looming tariff could potentially cause a headwind for companies such as Watches of Switzerland.
