Summary
- U.S.
President Donald Trump imposed a 39% tariff on Swiss imports, including
luxury watches, effective August 7, 2025. - Shares
in Swiss watch giants Richemont and Swatch fell sharply, dropping up to
3.4% and 5% in early Monday trading, before paring some losses. - The
Swiss Market Index dropped about 1% as investors digested the shock after
markets reopened from Friday’s national holiday. - The
U.S. is Switzerland’s largest export market for watches, accounting for
16.8% of exports—about 4.4 billion Swiss francs annually. - Industry
experts and executives warn the tariffs could be catastrophic for numerous
Swiss brands, especially entry- to mid-priced ones. - Richemont’s
U.S. exposure is just under 10% of total sales, while Swatch generated 18%
of 2024 revenue in the U.S. and raised prices by 5% following earlier
tariff signals. - Watch
exports already faced pressure from a stronger Swiss franc and sagging
global demand, heading for their lowest levels since the pandemic. - Swiss
and U.S. officials face mounting calls for diplomatic talks, with Swatch’s
CEO urging engagement between Swiss President Karin Keller-Sutter and
President Trump. - Traders
and analysts highlight deep uncertainty, expecting volatility until
diplomatic resolution or policy change.
Swiss luxury watchmakers were thrust into crisis mode
Monday as shares in industry leaders Richemont and Swatch tumbled following
U.S. President Donald Trump’s announcement of a 39% tariff on all Swiss
imports. The sweeping measure, effective August 7, 2025, threatens to reshape
one of Switzerland’s flagship export industries and reverberated across global
financial markets.
Why Did Swiss Watchmaker Shares Drop Sharply?
As reported by Isabel Demetz of Reuters, the “volatility was
immediate” for Richemont and Swatch shares, with both stocks sliding in early
Monday trade—Richemont down as much as 3.4% and Swatch by 5% before partially
recovering to 0.8% down at 08:25 GMT. The broader Swiss Market Index
slumped approximately 1%, echoing investor anxiety as markets reopened
following Friday’s Swiss National Day holiday.
Swiss equity futures had already been showing the pain, with
Bloomberg reporting a 2.5% plunge for the Swiss Market Index futures before
opening on Monday. The declines extended to other major Swiss stocks.
According to MarketWatch, Novartis shed 1% and Roche 2%, as investors braced
for extended fallout across multiple sectors, not just watches.
What Triggered President Trump’s Tariff Announcement?
According to Reuters, President Trump’s abrupt decision to
impose a 39% tariff came late last week, without immediate warning or detailed
rationale. The tariffs—which affect a sector exporting timepieces worth 26
billion francs ($32.79 billion) in 2024—hit an industry already challenged by
global headwinds and an appreciating Swiss franc. Monday’s trading session
was the first opportunity for investors to react.
How Significant Is the U.S. Market for Swiss Watchmakers?
Jean-Philippe Bertschy, a Vontobel analyst, told Amanda
Cooper and her editorial team at Reuters,
“The impact of the U.S. tariffs, if
they stay at 39%, could be devastating for numerous brands in Switzerland.”
He
further noted,
“We expect a strong negative impact for watches in the entry- to
mid-price segments”.
Reuters and the Federation of the Swiss Watch Industry
detail that the United States is Switzerland’s most important foreign market
for watches, comprising 16.8% of overall exports, which equates to about 4.4
billion francs ($5.45 billion) per year. Shahzaib Khan, a Swiss luxury
watch exporter, stressed to Reuters, “I suspect … there won’t be any goods
being shipped to the U.S. until the situation clears”.
How Exposed Are Major Swiss Watchmakers?
As noted by Jefferies analysts and cited in Reuters,
Richemont generated 32% of its full-year 2025 sales in the watches segment but
has just under 10% overall sales exposure to the United States—still
significant, given the company’s global scale.
Swatch, meanwhile, drew 18% of its 2024 sales from the U.S.
market. CEO Nick Hayek told Reuters that Swatch responded to April’s initial
tariff signals by hiking U.S. watch prices by 5%. He has now appealed publicly
for Swiss President Karin Keller-Sutter to open talks directly with President
Trump to de-escalate the situation.
What Are the Immediate Market and Industry Reactions?
According to reporting by Reuters and Global Banking and
Finance Review, the mood on Swiss trading floors was tense and uncertain.
Monday marked the first day of trading after the shock announcement, with the
market still digesting potential long-term consequences.
Georges Mari, co-owner of the Zurich-based Rossier Mari
& Co. investment group, told Reuters,
“Tariffs can be altered at any time
due to the volatility of the Trump administration … it is impossible to make a
credible prediction”.
Most industry experts and traders agree that
volatility is likely to persist until a diplomatic resolution is found, or U.S.
policy shifts.
Will Swiss Watch Exports Decline Further?
“As reported by Bloomberg,” watch exports had already been
heading for their lowest levels since the early COVID-19 pandemic due to
currency strength and weakening global demand. The 39% U.S. tariff could
mark a new low, as some exporters warn they may halt shipments until greater
clarity emerges on future trade conditions.
What Are Analysts and Executives Demanding Now?
With the clock ticking toward the August 7 tariff start
date, pressure is building for political engagement. “Nick Hayek, Chief
Executive of Swatch Group, urged Swiss President Karin Keller-Sutter to engage
in discussions with Trump,” note Amanda Cooper and Reuters. MarketWatch
highlights the risk of further contagion to wider Swiss stocks and the
possibility of retaliatory economic measures.
What’s Next for Swiss Watchmakers and Global Luxury Markets?
The sector’s outlook remains clouded by uncertainty, with
investors, analysts, and business owners vigorously lobbying for a diplomatic
breakthrough to avert prolonged damage. “The ramifications of the U.S. tariffs,
if maintained at 39%, could be catastrophic for many brands in Switzerland,”
stressed Philip Bertschy of Vontobel, via Reuters.
Until then, watchmakers are bracing for more turbulence,
facing not only a shrinking market in the U.S. but also the ripple effects
across supply chains, pricing strategies, and investor confidence.
