What Could Happen if the US Imposes 39% Tariffs on Swiss Watches?
If the Swiss government fails to reach an agreement with the Trump administration, prices for Swiss watches in the United States could rise by well over 10 per cent. With the White House announcing a dramatic increase in import duties on Swiss goods from 1 August, the watch industry faces a critical few days before the 39 per cent tariff comes into effect on 7 August.
A Shock Move from Washington
The new tariff plan targets selected Swiss exports. Pharmaceuticals, gold and financial services are excluded, leaving watches, certain categories of equipment and chocolate to bear the brunt. In 2024, Swiss watch exports to the US totalled CHF 4.4 billion (approximately USD 5.4 billion), accounting for around 17 per cent of total watch exports.
The White House move is motivated by a growing trade imbalance. In 2024, the US trade deficit with Switzerland rose 56.9 per cent to USD 38.5 billion. Imports from Switzerland climbed 21.3 per cent to USD 63.4 billion, while US exports to Switzerland fell 10.1 per cent to USD 25 billion. Negotiations on a free trade agreement have been stalled for nearly two decades.
Concerns in the Swiss Watch Industry
While the major groups Richemont, LVMH and Swatch Group have not issued official statements, industry insiders acknowledge the gravity of the threat. Oris chief executive Rolf Studer has previously indicated that the company could manage the existing 10 per cent tariff introduced in April, but a near fourfold increase would be unsustainable.
The risks are not confined to Swiss workers alone. Approximately 60,000 people are employed in Switzerland’s watch sector, but thousands more in the US depend on watch retail, marketing and distribution for their livelihoods.
Winners and Losers
Not all brands would be affected equally. The industry expects that:
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High-demand maisons such as Rolex and Patek Philippe, supported by long waiting lists, will continue to find willing buyers.
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Mid-tier and overproducing brands already contending with significant grey market discounting could see demand fall sharply.
A rapid price increase in the US market would likely push more consumers towards alternative purchasing channels.
Short-Term Strategies Before the Deadline
Manufacturers are already accelerating shipments to get stock into the US before the 7 August deadline. There remains faint hope that Switzerland could negotiate a rate closer to the UK’s 10 per cent import duty or the EU’s 15 per cent.
Some potential bargaining chips discussed in Swiss political and economic circles include:
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Increasing imports of US goods to narrow the trade gap
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Leveraging Switzerland’s gold reserves, estimated at over 1,000 tonnes worth USD 80 billion
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Adjusting financial regulations to favour US interests
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Expanding defence spending to align more closely with NATO’s recommended levels
However, these measures would require complex and politically delicate negotiations.
Possible Market Consequences
Several major brands have already raised prices in response to the existing 10 per cent tariff. If the 39 per cent rate is implemented, further increases are inevitable, impacting profitability and potentially reducing volumes.
One significant side effect could be the strengthening of the US secondary watch market. Market analysts warn that this would create two distinct global markets:
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A high-price environment for American buyers
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More favourable pricing for the rest of the world
Such segmentation could turn existing pre-tariff inventories in the US into sought-after assets in their own right.
The Secondary Market on the Rise
The first half of 2024 has already seen the US pre-owned watch market expand by 30 per cent in both value and unit sales. Vintage and hard-to-source references are likely to see heightened interest, particularly if new watch prices climb sharply. The result could be a boom for specialist dealers and online resale platforms, even as primary market sales come under pressure.
Conclusion
The prospect of a 39 per cent US tariff on Swiss watches poses one of the most significant trade challenges the industry has faced in decades. While the strongest brands may weather the storm, others will be forced to re-evaluate pricing strategies, production levels and market priorities. The coming days will be decisive in determining whether Swiss watchmaking faces a temporary setback or a lasting shift in its relationship with the American market.
