• On August 4, 2025, U.S. President Donald Trump announced a 39% tariff on Swiss imports, significantly above the 15% rate applied to the EU, Japan, and South Korea.
• Switzerland was excluded from previous trade deals signed with other major partners, making it uniquely exposed to this new policy.
• Switzerland is a major exporter of luxury goods to the United States, particularly watches, pharmaceuticals, and precision instruments.
• In 2024, Swiss exports to the U.S. totaled over $35 billion, with watches alone accounting for over $5 billion, about 17% of total Swiss watch exports.
• Switzerland maintains a large trade surplus with the U.S.
• Trump’s administration argues that Switzerland benefits from free access to U.S. markets without offering reciprocal terms.
• The lack of a formal U.S.–Switzerland free trade agreement (FTA) is a long-standing gap in bilateral relations.
• The shock announcement pushed shares of Swiss watch giants like Richemont and Swatch down sharply, and initial losses reached about 3–5% before partly rebounding.
• Exports of watches to the U.S., which represent about 16.8% of Switzerland’s total and are worth roughly SFr 4.4 billion (≈ $5.45 billion), face steep new obstacles.
• The industry was already under strain from a strong Swiss franc and weakening global demand, with exports now projected to drop to their lowest since the 2020 pandemic.
• Swatch CEO Nick Hayek urged Swiss political leaders, especially President Karin Keller Sutter, to negotiate directly with the U.S. and expressed cautious optimism: "It’s not doomsday." He noted that Swatch’s U.S. inventories, spanning three to six months, provide some short-term resilience.
• An extraordinary cabinet meeting was convened in Switzerland on August 4 to discuss possible responses before the tariffs come into force on August 7.
Why This Matters
• The tariff disproportionately impacts mid-priced Swiss watches, which are particularly exposed to U.S. demand.
• Swiss leaders and industry stakeholders face a tight window to negotiate or adjust strategies before implementation.
• The Swiss government may seek to revive stalled FTA talks with the U.S.
• Watchmakers, especially those with high U.S. exposure like Swatch, may look at price hikes, shipping delays, or temporary halts in exports as ways to cope.
• This move may impact Switzerland’s broader position in global trade, especially if other partners follow the U.S. lead.
• Without diplomatic resolution before the August 7 deadline, luxury watch exports could see a sharp short-term disruption.
• However, Swiss firms with inventory buffers in the U.S. and diversified markets may weather the initial impact while awaiting a political solution.
