Swiss watchmaker Swatch Group (SIX:)’s chief government Nick Hayek has a tariff drawback. And the clock is ticking, News.az stories citing CNN.
U.S. President Donald Trump unleashed a 39% tariff on most Swiss-made merchandise final week, which can come into impact on Thursday. The nation – recognized for its luxurious timepieces, chocolate and secretive banks – is racing to achieve a reprieve.
Trump’s tariffs – aimed, he says, at erasing world commerce imbalances – have rattled corporations world wide and sparked scrambles to shift provide chains and gross sales channels by many manufacturers – few extra recognizable than Swatch, which turned well-known for its plastic watches.
The United States is the most important export marketplace for Swiss watches.
Shares in Swiss watch and luxurious companies, together with Swatch, slid almost 5% on Monday on information of the tariffs earlier than paring again losses.
Swatch Group – the largest Swiss watchmaker by gross sales quantity – is making an attempt to adapt, Hayek advised Reuters. The firm has front-loaded shipments to the United States, is tapping U.S. consumers as they journey overseas, and has additionally raised its costs.
Part of the problem for the trade is that Swiss watches have to be 60% made within the nation, making it onerous to shift manufacturing elsewhere.
“We produce everything in Switzerland, not in China. And we have a high cost. And when you add a 39% tariff, we cannot absorb that. So prices will go up for sure,” Hayek mentioned on Monday, with out giving specifics on the potential rise.
Swatch Group, which additionally owns Swiss luxurious watch manufacturers resembling Omega, Tissot and Longines, already raised costs by 5% following Trump’s first tariff announcement in April.
Hayek defined that the agency had began to ship further stock to the United States earlier within the 12 months when Trump’s preliminary salvo of world tariffs hit. Swiss watchmakers extra broadly noticed a spike in exports in April, commerce knowledge present.
“We shipped much more products to the United States, so this means there is not an immediate impact on us,” he mentioned, including that Swatch has a minimum of three to 6 months of U.S. inventory in warehouses and shops, giving a short-term buffer from tariffs.
The agency plans to ship “a little bit more” stock over the subsequent few days earlier than the tariffs take impact.
Hayek mentioned demand for its watches remained sturdy within the United States, for now.
Jean-Philippe Bertschy, an analyst at Bank Vontobel, a Zurich-based personal financial institution, mentioned increased stock ranges constructed up by watchmakers would give them respiration house just for the brief time period. Super premium watches may extra simply go on further prices than mid-market and entry stage ones, he mentioned.
“The industry will be hoping and praying that the tariffs can be negotiated down to something like the 15% that Europe has,” Bertschy mentioned. “If the 39% tariff remained, it would be devastating for the industry.”
The watchmaking trade is Switzerland’s third-largest export sector, behind chemical compounds and prescription drugs, and gross sales of equipment. It made up 9% of Swiss exports in 2024.
For watchmakers, a silver lining was the flexibleness of gross sales channels for his or her transportable merchandise, which meant Swatch may goal U.S. consumers whereas they’re abroad in vacationer scorching spots. “Customers are mobile,” Hayek mentioned.
When China imposed luxurious taxes, that merely drove Chinese customers to buy in Macau and Hong Kong, he mentioned.
“There are many possibilities for Americans. They travel all over the world,” mentioned Hayek, pointing to choices like retailers aboard cruise ships. “They continue to buy even if you have to increase the prices in the United States.”
’WHAT COUNTS IS WHAT TRUMP IS SAYING’
Nonetheless, Swatch is eager for the Swiss authorities to shortly strike a deal to avert the threatened 39% tariff.
Hayek referred to as on Swiss President Karin Keller-Sutter to journey shortly to the United States to resolve the difficulty.
The tariff fee – one of many highest tariffs globally – may hit different Swiss luxurious manufacturers resembling Rolex and Patek Philippe.
“The ’Swiss-made’ label is part of our DNA. The history and expertise of our industry are unique worldwide,” Yves Bugmann, president of the Federation of the Swiss Watch Industry, mentioned. “It is therefore inconceivable to abandon or dilute the label.”
The United States is the largest international marketplace for Swiss watches general, accounting for 16.8% of exports value about 4.4 billion Swiss francs ($5.44 billion), federation knowledge present.
Bugmann mentioned that the Swiss watchmaking sector had been investing in coaching within the United States in addition to retail networks and providers, including the tariffs marked a “serious blow” that will not directly harm the U.S. financial system.
Underscoring the risky outlook, Georges Mari, co-owner of Zurich-based funding agency Rossier, Mari & Associates, which holds shares in Swatch, mentioned it’s “impossible” to forecast the influence on the trade.
“Tariffs can change at any moment due to the unpredictability of the Trump administration,” Mari mentioned. The U.S. market generated 18% of Swatch Group’s gross sales in 2024, in response to dealer Jefferies.
Switzerland’s authorities mentioned it was able to make a “more attractive offer” in commerce talks with Washington, after it held a unprecedented cupboard assembly on Monday to debate its response to the tariff.
Swatch Group CEO Hayek mentioned it wasn’t but “doomsday” and hoped an settlement may very well be struck – although that was very a lot within the palms of the U.S. president.
“What counts on the U.S. side is what Mr. Trump is saying,” he mentioned. “Nobody else.”
