What's Happening?
Swiss watch exports experienced a significant decline in September, primarily due to the Trump administration's imposition of a 39 percent tariff on imports from Switzerland, which is the largest market
for these exports. According to the Federation of the Swiss Watch Industry, exports fell by 3.1 percent from the previous year, amounting to 2 billion Swiss francs ($2.5 billion). The decline was most pronounced in the U.S. market, where exports plummeted by 55 percent. This marks the second consecutive month of reduced exports to the U.S., following a surge in July as manufacturers increased inventory in anticipation of the tariffs. Major Swiss watchmakers, including Richemont, Swatch Group AG, Audemars Piguet, Patek Philippe, and Rolex SA, have been impacted by these tariffs.
Why It's Important?
The tariffs imposed by the Trump administration have significant implications for the Swiss watch industry, which relies heavily on the U.S. market. The 39 percent tariff is one of the highest in the developed world, affecting both luxury and mid-priced watch segments. The decline in exports could lead to financial strain for Swiss watchmakers and potentially impact their global market strategies. Additionally, the tariffs may influence consumer prices in the U.S., potentially reducing demand for Swiss watches. The situation underscores the broader impact of trade policies on international business and the luxury goods market.
What's Next?
The Swiss government is actively seeking to negotiate with the U.S. to reduce the tariffs, although progress has been limited. Commerce Secretary Howard Lutnick indicated the possibility of reaching a deal, but no significant advancements have been reported. Switzerland has proposed investing in the U.S. gold-refining industry as a bargaining tool to secure a more favorable tariff arrangement. The outcome of these negotiations will be crucial for the Swiss watch industry and could set a precedent for future trade discussions between the two countries.
