Switzerland and its prominent watchmaking industry are poised to face significant challenges due to an impending 31% tariff from the United States. Despite Switzerland’s traditional stance of neutrality in many international matters, including European integration, the new levy places it among the highest-taxed nations in Europe. The primary business lobby in the country has labeled these tariffs as both “harmful and unjustified.”
Following an announcement by President Donald Trump, Switzerland’s key exports including cheese, chocolate, and pharmaceuticals are likely to experience negative impacts, with the U.S. being the most significant export market for Swiss watches. In 2024, Swiss watch exports to the U.S. increased by 5%, reaching CHF 4.3 billion ($5.2 billion).
The decrease in demand from China since the COVID-19 pandemic has driven Swiss watch companies to rely more heavily on the American market. Richemont, the company behind brands such as IWC and Jaeger-LeCoultre, noted this trend in its sales last year. Due to the significant history and expertise concentrated in Switzerland, watchmakers are unable to relocate their production facilities easily.
Major watch companies are expected to raise prices on high-end watches. However, according to Pierre-Yves Donzé, a professor of business history at Osaka University specializing in the watch industry, mid-range brands could face greater difficulties. He suggests that brands like Swatch Group, which are already struggling, might be particularly affected as pricing plays a critical role in their market strategy.
Swatch Group, which owns a range of brands from Tissot to Omega, has been adversely affected by declining demand from China, resulting in a 14% drop in net sales last year. The new tariffs are likely to make some of its watches significantly more expensive for average U.S. consumers.
The current situation has parallels with the imposition of tariffs nearly a century ago under the Smoot-Hawley Act, which is believed to have contributed to the Great Depression. At that time, Switzerland boycotted U.S. products in response to the tariffs.
Paul Altieri, CEO of Bob’s Watches, anticipates an increase in demand for pre-owned watches, which often attract collectors. He suggests that if the market for new watches slows under the tariffs’ pressure, buyers may turn to the secondary market, potentially altering the luxury watch industry’s landscape.
Changes in consumer behavior are already being observed by Robertino Altieri of WatchGuys.com, as illustrated by clients reconsidering selling watches based on speculation about rising prices.
Donzé noted in correspondence that the secondary market for watches is complex, with prices either soaring for select brands like Rolex or being significantly lower due to limited demand for others.
With these challenges looming, Switzerland’s government is contemplating its next steps. President Karin Keller-Sutter emphasized the importance of the country’s long-term economic interests, adherence to international law, and free trade in a recent post on social media platform X.
This development in the Swiss watch industry was originally covered by Fortune.com.
