Swiss watchmakers sound upbeat on US as long as stocks last

[ZURICH] Swiss watchmakers at their annual back-to-school gathering in Geneva were putting a brave face on US President Donald Trump’s tariffs threatening their businesses. That may change if their US stockpiles run out.

A surge in exports in July should spare watchmakers, at least in the short term, from bearing the brunt of the 39 per cent levy imposed by the US last month on products from Switzerland, and exhibitors were generally upbeat about Swiss officials’ chances of getting a better deal before their wiggle room runs out.

“This should be solved, or partially solved, in the following weeks or months. So let’s keep being positive,” Breitling’s chief executive officer Georges Kern said at the opening of the Geneva Watch Days meeting on Wednesday (Sep 3). “Everybody has backup plans and some months of inventory just in case.”

The scale of Trump’s tariff on Switzerland, part of his strategy to revitalise US manufacturing, shocked the government in Bern, which had expected a levy similar to the 15 per cent negotiated by the European Union. Instead, exporters such as Swatch Group and Cartier-owner Compagnie Financière Richemont suddenly faced the highest rate imposed by the US on any developed economy.

It comes at a difficult time for luxury watchmakers as geopolitical tensions and record gold prices weigh on demand. The US is the biggest or second-biggest market for most Swiss brands, accounting for about 20 per cent of watch exports worth 2.6 billion Swiss francs (S$4.2 billion) in the first half of 2025, according to the Federation of the Swiss Watch Industry.

The response from watchmakers was varied. Grenchen-based Favre Leuba, one of the oldest brands established in 1737, paused plans to enter the US market, part of a strategy to widen its customer base beyond its stronghold in India, as soon as the tariff rate was announced, said chairman Patrik Paul Hoffmann.

“If the tariffs will stay in place longer than just three to four months, the impact will be rather substantial for the Swiss watch industry,” he said.

Others are pushing ahead. ZRC 1904, known for making the first diving watch with a patented crown protection system that creates a watertight seal and prevents accidental flooding, is continuing with a plan to add retailers, which started a few months ago despite the tariffs.

Export boost

Companies rushing to get stock into the US ahead of the tariffs delivered a shot-in-the-arm to July’s export numbers, which were up 6.9 per cent from a year earlier. Excluding the US, though, exports would have dropped 0.9 per cent as shipments to markets such as Japan and China underscored the industry’s struggles.

Bloomberg Intelligence expects the downward export trend to resume after the US stockpiling in July and early August.

Still, executives in Geneva, where 66 brands had set up shop in hotel rooms, booths and exhibition spaces to display their products, said much depends on what happens with the tariffs.

Swiss trade negotiators are still working on bringing down the levy. “We are hoping to find a better deal. The difference with Europe is quite shocking,” said Delphine Bachmann, Geneva’s state councillor in charge of the canton’s department of economy and labour.

The Swiss delegation met US officials in Washington on Friday for more trade talks. In a post on X, Swiss vice-president Guy Parmelin described the meetings with Secretary of Commerce Howard Lutnick, Secretary of the Treasury Scott Bessent and Trade Representative Jamieson Greer as “constructive”, but did not provide further details.

Meanwhile, Watches of Switzerland Group, the top seller of Rolex watches in the UK, also gave the industry cause for optimism in spite of the trade friction. Trading had been “consistently strong” particularly in the US, it said on Wednesday in a financial update that triggered a spike in its shares.

“The general mood in Switzerland is that the situation will improve from what it is today,” chief executive officer Brian Duffy said. BLOOMBERG