Luxury watch manufacturers in Switzerland face financial setbacks following Trump's proposed tariffs
The U.S. imposed a 39% tariff on Swiss luxury watches, such as those produced by Richemont and Swatch, on August 7, 2025. This move is expected to significantly increase retail prices in the U.S., with new Swiss watches seeing a rise of approximately 12-14%.
The tariff was imposed due to a $38.5 billion U.S. trade deficit with Switzerland and the failure to negotiate a new trade agreement. Industry leaders, including major Swiss luxury watchmakers, view this tariff as exceptionally high compared to tariffs imposed on other European watchmaking countries like Germany and Japan, which have negotiated more favorable terms with the U.S.
In response, Swiss government officials and industry representatives have been actively pressing Switzerland's Federal Council and trade negotiators to secure a deal that would reduce or eliminate these levies before the tariff took effect. Despite intensive diplomatic efforts, no successful trade agreement had been reached before August 7, leaving the tariff in place.
The tariffs threaten heavy damage to Switzerland's luxury goods industry, with industry associations warning that tens of thousands of jobs are at risk. Analyst Jean-Philippe Bertschy stated that the U.S. tariffs, if they remain at 39%, could be devastating for many Swiss brands.
Swiss companies, such as Richemont and Swatch, experienced volatility in early trade on Monday, with shares down around 1% at 09:06 a.m. GMT. Swatch Group CEO Nick Hayek has called for a meeting with Swiss President Karin Keller-Sutter to discuss the tariffs with U.S. President Trump.
The U.S. is Switzerland's leading foreign market for watches, accounting for 16.8% of exports worth about 4.4 billion Swiss francs. In 2024, the sector exported watches worth 26 billion Swiss francs ($32.79 billion), with Swatch generating 18% of its 2024 sales in the U.S. Richemont, on the other hand, generated 32% of its full-year 2025 sales in the watches category.
The tariffs come at a time when watch exports are expected to hit their lowest levels since the COVID-19 pandemic in 2020. The SMI index, an index of Swiss blue-chip stocks, hit its lowest level since mid-April on Monday, reflecting the market's concern over the tariffs' impact on Swiss companies.
This tariff represents a major disruption to Swiss luxury watchmakers reliant on the U.S. market and illustrates the broader trade tensions affecting this sector. Richemont's exposure to the U.S. market should be just below 10% of overall sales, according to analysts at Jefferies. Switzerland had given U.S. goods virtually free access to its market.
[1] Federation of the Swiss Watch Industry [2] Reuters [3] Bloomberg [4] Swissinfo.ch
- The high tariff imposed on Swiss luxury watches could negatively impact the finance sector, as the increased prices might deter consumers from investing in these luxury items, potentially causing a decrease in business revenue for major Swiss watchmakers.
- With the tariff imposed on Swiss luxury watches affecting the industry heavily, Switzerland's Federal Council and trade negotiators are now under pressure to secure a deal with the U.S., hoping to reduce or eliminate the levies and prevent financial losses for thousands of businesses and jobs linked to the watchmaking industry.
