Swiss Watchmakers Breathe a Sigh of Relief as U.S. Tariffs Plummet from 39% to 15%
In a move that’s sure to delight Swiss watch enthusiasts and industry leaders alike, the U.S. and Switzerland have struck a deal to slash tariffs on Swiss watches from a staggering 39% to a much more manageable 15%. This agreement comes as a lifeline for the Swiss watch industry, which has been reeling under the weight of these hefty levies since August. But here’s where it gets interesting: the deal wasn’t just about watches. It’s part of a broader agreement that includes Swiss pharmaceutical and gold refining companies building plants in the U.S.
The Swiss government celebrated the news on social media, thanking President Trump for his constructive engagement. Meanwhile, U.S. Trade Representative Jamieson Greer confirmed the deal in a CNBC interview, highlighting the mutual benefits for both nations. And this is the part most people miss: the agreement wasn’t just a diplomatic win—it was the result of a “new dynamic” in discussions with the White House, according to Switzerland’s Minister of Economic Affairs, Guy Parmelin.
For the Swiss watch industry, this deal is more than just financial relief. Yves Bugmann, head of the Federation of the Swiss Watch Industry, described it as a “bit more security” after months of uncertainty. The U.S., after all, is the largest single market for Swiss watch exports, accounting for about 20% of shipments. But the road to this agreement wasn’t without its twists and turns. A high-profile visit to the White House by Swiss business leaders, including Rolex CEO Jean-Frédéric Dufour and Richemont Chairman Johann Rupert, played a pivotal role in strengthening economic ties—though participants were quick to clarify it wasn’t a negotiation.
Controversial Interpretation Alert: Some critics argue that the deal favors U.S. manufacturing interests more than it does Swiss exporters. What do you think? Is this a fair trade-off, or should Switzerland have pushed for more?
The tariff reduction comes at a critical time for Swiss watchmakers, who have been grappling with multiple challenges. Not only have they faced sky-high tariffs, but they’ve also had to contend with a strong Swiss franc and record-high gold prices—a key component in luxury watches. Brands like Patek Philippe, Omega, and Jaeger-LeCoultre have been forced to raise prices in the U.S. by up to 15% to offset these costs.
Adding to the drama, the deal almost fell apart after a phone call between Swiss President Karin Keller-Sutter and President Trump failed to seal the agreement earlier this summer. “It was potentially devastating for the whole of Switzerland,” Rupert remarked, underscoring the stakes involved. Richemont, the Swiss luxury conglomerate, reported a €50 million financial hit from tariffs in the first half of the year, with CFO Burkhart Grund warning of a much larger impact if the 39% rate had remained.
But there’s a silver lining: Richemont’s recent financial results exceeded expectations, thanks to strong sales in China and the U.S. Its Specialist Watchmakers unit saw a 3% rise in the second quarter, rebounding from an 8% drop in the first. Analysts like Jean-Philippe Bertschy of Vontobel were particularly impressed by the performance of Richemont’s jewelry brands, which outpaced competitors and showcased the enduring appeal of Cartier and Van Cleef & Arpels.
As the dust settles on this tariff saga, the question remains: Will this deal mark the beginning of a new era of stability for the Swiss watch industry, or are there more challenges on the horizon? We’d love to hear your thoughts in the comments below. After all, in the world of luxury watches, every tick of the clock counts.
