High-end imported products facing the brunt of Trump's perplexing fresh tariff policy
The proposed 39% tariff by President Trump on Swiss goods exported to the U.S. is set to have significant implications for Swiss industries and companies, including luxury watchmakers like Rolex, Nestlé, and Mettler Toledo.
The tariff, which is one of the highest in the world, follows previous import duties and comes at a time when these industries are already recovering from the pandemic and other economic pressures. For Swiss watchmakers, which heavily rely on the U.S. market, the tariff could substantially increase costs, potentially raising retail prices or squeezing profit margins, making it much harder to compete in the American market.
Swiss watch exports to the U.S. were valued at over $6 billion in 2024, so this tariff represents a major barrier likely to reduce demand, profitability, and market share for luxury brands including Rolex, Patek Philippe, Audemars Piguet, and Omega. Independent and smaller Swiss watchmakers aiming to grow in the U.S. may find the tariff exacerbates entry difficulties.
Other Swiss companies such as Nestlé and Mettler Toledo, which also export to the U.S., would face similar cost increases. While the specific impact on food products like those from Nestlé or precision instruments from Mettler Toledo was not detailed, the 39% ad valorem tariff applies broadly to all Swiss imports, making their goods more expensive and less competitive in the U.S. market.
The U.S. is Switzerland's top foreign watch market, and exports to America have grown 14% each year since 2019, three times faster than the worldwide average. The tariff could harm Swiss exporters by increasing trade friction and creating economic uncertainty. U.S. importers and retailers may accelerate shipments before the tariff takes effect, but the long-term challenge for Swiss industries will be managing higher costs and potential market contraction due to reduced U.S. demand.
It is worth noting that gold and pharmaceuticals are thought to be excluded from the new tariff. Shares of Watches of Switzerland Group, a Rolex reseller listed on the London stock exchange, fell more than 9% on the news. Richemont, which owns watch brands Jaeger-LeCoultre and Cartier, saw a 3% drop in shares. Swatch, the parent company of Omega and Longines, also experienced a slight dip in shares.
The tariff could still be negotiated down before Trump's Aug. 7 deadline, and the deadline could be extended. Deals with trade partners such as the United Kingdom, South Korea, Japan, and European Union have been solidified, offering some relief to Swiss exporters. However, the proposed tariff remains a significant concern for the Swiss economy and its industries.
[1] New York Times [2] Bloomberg
- The proposed 39% tariff on Swiss imports could significantly affect various industries in Switzerland, such as the finance sector, given the potential economic uncertainties and increased costs for Swiss exporters, particularly in the business sector.
- For Swiss companies like Nestlé, Mettler Toledo, and Rolex that heavily rely on the American market, the finance sector could witness a substantial impact, as the tariff could lead to reduced demand, profitability, and market share, potentially jeopardizing their financial stability.
