Swiss Watchmakers’ Gamble: Tariff Tensions, Trade Talks & a Possible Relief Deal
- Luxe magazine Switzerland
- 4 days ago
- 5 min read
Updated: 18 hours ago
Swiss Watchmakers’ Gamble: Tariff Tensions, Trade Talks & a Possible Relief Deal
In the latest twist of global trade drama, Swiss watchmakers face a pivotal moment: a steep 39% U.S. tariff, imposed earlier this year, hangs over one of their most important markets and there is now a glimmer of hope for meaningful relief. The potential reduction of this tariff to 15%, if it materializes, could reshape the luxury watch landscape, affecting brand profitability, consumer pricing, and even the dynamics of the pre-owned market.
The 39% Tariff Shock: What Happened
In August 2025, under a broad trade reset, the Trump administration imposed a 39% tariff on Swiss exports to the United States. This punitive duty is among the highest levied on any developed economy, and it disproportionately targets high-value, precision-made products including Swiss watches.
The impact was immediate and severe. Some U.S. importers and retailers reported a collapse in Swiss watch exports, while brands scrambled to mitigate the blow. Swatch Group’s CEO, Nick Hayek, openly acknowledged that the duty would force price increases in the U.S. ranging, by his estimate, from 5% to 15% on models across its portfolio.
On top of that, Swiss watchmakers rushed to front-load inventories in the months leading up to August, sending large shipments ahead of the tariff implementation. Despite that, September export data revealed a dramatic drop: Swiss watch exports to the U.S. plunged approximately 56% year-on-year.
A Ray of Optimism Can Tariffs Really Go Down?
By November 2025, markets began to perk up. Donald Trump publicly signaled that he is “working on a deal” with Switzerland to lower the 39% rate. He did not specify a final number, but he emphasized a desire to help Switzerland, describing it as a “very good ally.”
News reports suggest that the working target for a deal could be a tariff rate of 15% significantly lower than the current 39%. According to insiders, the agreement could be finalized soon, possibly by mid-to-late November, pending Trump’s approval.
The Swiss government, notably its Economic Affairs Ministry, has declined to comment publicly on the negotiations. But on the financial front, reaction was swift: Swatch Group shares jumped ~4.2%, while Richemont shares rose ~2% on optimism that tariff relief could ease price pressure and reignite demand in the U.S.
Why the U.S. Market Matters So Much to Swiss Watchmakers
Critical Sales Channel
The United States is one of the most important markets for Swiss watches. The Swiss watch industry federation estimates that about 19% of Swiss watch exports go to the U.S. For firms like Richemont (owner of Cartier, IWC, Piaget), the U.S. represents a crucial part of revenue.
Brand Exposure and Price Sensitivity
Brands with deeper exposure to U.S.-made Swiss product like Swatch are more vulnerable to the full impact of the tariff, because they produce a high percentage of goods in Switzerland. Price increases risk alienating American consumers who might either delay purchases, shop abroad, or turn to the secondary market.
Profit Margins Under Pressure
Analysts suggest that cutting the duty from 39% to 15% would alleviate immediate margin stress. If a deal goes through, profit resilience could improve for both listed players like Richemont and Swatch, and for smaller Swiss houses.
Challenges and Risks Even with a Tariff Cut
While the prospect of a tariff reduction is promising, several risks remain and not all of them are resolved simply by dropping the rate.
Inventory Risk & Demand Volatility
Swiss manufacturers appear to have built up a more-than-healthy inventory as a hedge. But the sudden collapse in U.S. exports raises the question of demand recovery: will consumers rush back in if tariffs drop? Or will some buyers remain cautious?
Consumer Behavior & Price Elasticity
Some analysts warn that U.S. consumers may have already adapted to higher pricing, or shifted to used or second-hand channels. That behaviour may not revert quickly, even if tariffs go down. For example, pre-owned Rolexes and other luxury timepieces may continue to attract buyers because they are not subject to the same import duty structure.
Will Brands Pass the Benefit to Customers?
There’s significant uncertainty around whether Swiss watch brands will lower their U.S. prices if the deal materializes. Some market watchers worry that companies may absorb the gains to rebuild margins, rather than cut retail prices, especially since many raised prices already.
Long-Term Trade Uncertainty
A deal may stabilize the industry for now, but what about the future? If the U.S. imposes further trade restrictions, or if there’s political turnover, the risk could return. Swiss executives have also raised concerns over how strongly the U.S. commitment might hold.
Who Could Benefit and Who Might Be Hurt
Large Public Players: Richemont and Swatch stand to benefit most, given their size, U.S. market exposure, and ability to absorb short-term shock. A reduction in tariff would restore some profitability and allow them to invest strategically in U.S. sales and marketing again.
Smaller/Niche Swiss Brands: For high-end independent brands or small manufactures, lower tariffs could unlock U.S. demand that was previously inaccessible. That could be a major growth lever and a chance to expand their footprint in a critical luxury market.
Collectors & U.S. Consumers: If brands pass on tariff savings, consumers may see price relief. But if not, we could instead see higher retained margins for watchmakers. For collectors, the second-hand market may remain very attractive.
Pre-Owned Market: A tariff cut could slightly cool demand for pre-owned models if buyers return to boutiques, but the secondary market’s momentum could persist given stock levels, pricing dynamics, and collector psychology.
Broader Strategic Implications: Trade, Diplomacy & Luxury
This potential deal is not just about watches it’s emblematic of broader global trade tensions and how luxury goods sit at the heart of them. For Switzerland, the negotiation underscores the country’s economic reliance on highly specialized, precision exports. For the U.S., lowering the duty could help sustain a vitally strategic trade relationship, especially with a long-standing ally.
Additionally, this move may strengthen Switzerland’s case for deeper economic ties with its trading partners. As Swiss officials jockey to protect their luxury export base, they also signal their willingness to invest in U.S. infrastructure, high-tech industries, and bilateral projects.
What’s Next Watch Industry Scenarios
Deal Finalized at 15%
Brands may gradually roll back price increases.
Inventory flows stabilize.
U.S. demand rebounds moderately.
Deal Fails / Delayed
Continued margin pressure.
Some brands may shift U.S. strategy (more duty-free, more manufacturing abroad).
Pre-owned market remains strong; new sales hit again.
.Partial Relief or Tiered Tariff
Tariff cut might apply only to certain categories (e.g., mechanical vs quartz).
Brands may reclassify models, adjust manufacturing origin, or restructure distribution.
Conclusion: A Turning Point for Swiss Watchmaking
Swiss watchmakers are riding a geopolitical wave. The 39% U.S. tariff cut off one of their most valuable markets, threatening brand profitability and putting pressure on long-term strategic growth. But now, with tentative signs of a deal, the industry may be at a turning point.
If the tariff is indeed reduced to 15%, the potential ripple effects are far-reaching for brand margins, for U.S.-based consumers, for the balance between new and pre-owned, and for how luxury watchmaking strategically positions itself in a volatile global landscape.
In other words, this isn’t just a negotiation over trade law: it may well reshape the future of Swiss luxury horology, with implications for everyone from boardroom executives to watch enthusiasts and collectors.
