U.S. President Donald Trump is expected to impose a 39% high tariff on Swiss products, which will significantly impact Switzerland, the world's largest watch exporter, in the U.S. market.
According to foreign media including Business Insider on the 3rd (local time), the U.S. Trade Representative (USTR) announced that it would impose a blanket reciprocal tariff of 39% on Swiss imports starting from the 7th, as the bilateral trade negotiations with Switzerland did not conclude by the August 1 deadline. This figure is 8 percentage points higher than the reciprocal tariff rate (31%) that was announced for Switzerland in April.
Due to this tariff measure, luxury watch products from prominent Swiss brands like Rolex, Omega, Patek Philippe, and Cartier, which already cost tens of thousands to hundreds of thousands of euros, are expected to see sales prices in the U.S. rise by more than 20%.
Market research firm Jefferies noted, 'U.S. dealers have already raised consumer prices of some models by 10% to 15% to offset the cost of new imports,' and added, 'prices could surge up to 35% once tariffs become fully effective.'
The demand from watch collectors is already shifting to the second-hand market. Platforms for trading luxury watches, including Chrono24, WatchCharts, and Bob's Watches, have reported a significant increase in transaction volume over the past few weeks. Morgan Stanley reported that 'the second-hand luxury watch market currently accounts for 30% of the total watch distribution, the highest level in the luxury category.'
Eugene Tutunikov, head of the U.S. branch of Chrono24, told Business Insider, 'The 39% tariff has made new products a luxury item that only 'the top 1% can justify buying,' and that 'the second-hand market will react even faster.' He projected that 'within a month after the tariff takes effect, prices for second-hand watches could rise by up to 10%, and within the next six months, by as much as 35%.'
Watches of Switzerland Group Plc, one of the largest luxury watch retailers in the U.S., saw its stock drop 7.3% in one day right after the tariff announcement. The company distributes various Swiss luxury watches, including Rolex, in U.S. and UK stores, and its stock has already fallen nearly 20% this year.
The impact of the tariff is spreading throughout the watch industry. Luxury watch manufacturers Swatch Group and Richemont are also facing concerns over declining sales in the U.S. Richemont reported a 7% decrease in watch sales in the most recent quarter, while Swatch has warned of margin reductions due to external factors like gold prices, exchange rates, and tariffs.
After the tariff announcement, the Swiss watch federation (FHS) expressed concern, stating, 'Based on June export performance, we are already seeing a decline in major markets like the U.S., Japan, and Hong Kong, and this measure could accelerate the downturn.'
The Swiss government issued a statement saying, 'Switzerland has eliminated domestic tariffs on all industrial goods imports since last year, and this measure, which contradicts the principle of reciprocity with the U.S., is very regrettable.' Swiss President Karin Keller-Sutter noted that 'negotiations with the Trump administration continued up to the last moment, but it appears they broke off without White House approval,' and she added, 'We will attempt to renegotiate.'
Not only the watch industry but the Swiss pharmaceutical sector is also being impacted. Multinational pharmaceutical companies Roche and Novartis stated, 'We are seeking exemptions from tariffs to maintain medicine access and supply chain in the U.S.' Roche indicated its plan to invest $50 billion in the U.S. to create 12,000 jobs and is working to avert concerns over medication supply disruptions.
Some analysts argue that Switzerland's diplomatic response to the tariff bomb from the U.S. has been insufficient. This is because the tariffs imposed on Switzerland differ excessively compared to the 15% and 10% tariffs placed on the 27 EU countries and the UK, respectively. Some foreign media have reported that Trump was 'angry' with the Swiss president for not showing 'good faith' in solving the trade imbalance on the 31st of last month.
In response, Minister Guy Parmelin acknowledged that the discussions between the leaders were not successful, stating, 'There was no quarrel between the leaders. President Trump had a completely different perspective from the start.'