U.S. tariff cautions causing tumult among Swiss watch manufacturers
In the world of luxury timepieces, the Swiss watch industry is facing a significant challenge. President Donald Trump's 39% tariffs on Swiss goods have sent ripples through the industry, with potential consequences for brands reliant on the US market.
According to reports, the US represents approximately 20% of Swiss watch exports, amounting to 2.6 billion Swiss francs ($3.3 billion) in the first half of 2025. Swiss watchmakers are responding to the tariffs in various ways, from building up inventories in the US to mitigate immediate losses, to rethinking their strategies for the long term.
Bloomberg Intelligence has warned that the downward trend in the Swiss watch industry may resume once stockpiles are depleted. Prolonged tariffs could force higher retail prices, reduce margins, or slow expansion plans for brands heavily invested in the US market.
Georges Kern, CEO of Breitling AG, has stated that the impacts of the tariffs should be addressed within weeks or months. Smaller Swiss watch companies like Favre Leuba have paused US market expansion due to potential significant impacts of the tariffs, while others, like ZRC 1904, are pushing ahead with planned retailer expansions, betting on long-term resilience.
The negotiations between Swiss officials and US representatives have been described as "constructive". Swiss officials are negotiating with Washington to secure a deal closer to the 15% levy previously negotiated by the European Union.
The tariffs' scale is forcing Swiss watch brands to reassess their strategies. Watches of Switzerland Group Plc, the UK's top Rolex seller, reported consistently strong US trading. However, CEO Brian Duffy of Watches of Switzerland Group Plc stated that the general mood in Switzerland is that the situation will improve from what it is today.
Short-term strategies, such as stockpiling and inventory management, may cushion the blow for Swiss watchmakers. Swiss watch exports saw a 6.9% year-on-year increase in July, largely due to pre-tariff shipments to the US.
However, not all news is negative. Excluding the US, Swiss watch exports would have fallen 0.9% in July, indicating struggles in other markets. The negotiations between Swiss officials and US representatives continue, with the long-term stability of the Swiss watch industry depending on their outcome.
In a surprising development, DKSH sold its majority stake in the Swiss watch manufacturer Glycine Watch S.A. to the US-based Invicta Watch Group. Whether this move is a response to the tariffs or a strategic decision remains unclear.
Swiss watchmakers are balancing caution with confidence, hoping that diplomacy and strategic planning will mitigate one of the most disruptive challenges the industry has faced in years. The industry's resilience and adaptability will be tested in the coming months as the tariff situation unfolds.
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