US Tariffs Hit Swiss Watchmakers Hard

Racing Against the Deadline
Earlier this week, DuBois et fils hurried out five luxury watches worth thousands of dollars apiece from its Muttenz facility near Basel to the U.S. in a bid to pass through customs before the tariff came into effect. On Wednesday, the company said it was making plans to implement the price hikes and had blocked orders for the U.S. For example, the DuBois DBF008 watch is priced to climb from $10,800 up to $14,500.

The tariff, which surged from 10% in April to 39%, went into effect at 0400 GMT on Thursday after the Swiss president returned home empty-handed from Washington. The U.S. had been a strong growth driver in recent years, Steinemann said, but the added expense "will kill a lot of the business." DuBois does roughly 15% of its business in the U.S.

Rolex, Patek Philippe, Tag Heuer, Omega and IWC Schaffhausen are among the larger Swiss watch brands preparing for a hit. According to industry data, the United States alone accounted for 17% of Switzerland's total 26 billion Swiss francs ($32 billion) in watch exports last year. In April, many companies rushed to increase exports to the U.S. before earlier tariff deadlines.

Industry Shock and Economic Impact
Under the new duties and a weaker dollar, Amarildo Pilo, who owns Pilo & Co. and founded the Swiss Independent Watchmakers Pavilion, estimated he will have to lift prices on Swiss watches about 65 percent in the US. Instead, he reckons that a lot of Americans will simply buy overseas, which he says would be "a massive loss for the United States".

Economists say the decision may dent the Swiss economy, possibly reducing GDP growth by 0.3% to 0.6% over the next year. As a result, indirect effects could mean more joblessness, Cite Gestion Private Bank's John Plassard said.

Sacha Davidoff, a vintage watch dealer in Geneva, said the 39% tariff was the "game over" level for U.S. exports of vintage watches—moving businesses to put America commercially "on pause" and refocus on domestic customers instead. But while he remains optimistic that a solution can be found, he still acknowledged that the upcoming months are going to be tough for everyone in the industry.