Greetings in Japanese offered for a restaurant chain named 'The Five', based in Japan, now extending its services to Damansara Heights. They specialize in gluten-free udon and plant-based culinary offerings.
The 39% U.S. tariff on Swiss imports, including watches, significantly impacts Swiss watch manufacturers like DuBois et fils and the broader Swiss watch industry. This tariff hike, from 10% to 39%, comes at a time when the industry already faces challenges such as reduced global demand post-pandemic, a strong Swiss franc, and rising production costs.
The U.S. market had been a major growth driver for Swiss watches, offsetting waning demand in Europe and China. The tariff adds substantial financial strain to the industry, as manufacturers and exporters must now either absorb the higher costs, reduce profit margins, or pass them on to U.S. consumers, likely reducing sales volumes due to higher retail prices.
DuBois et fils, a Swiss watch manufacturer exporting to the U.S., will be directly affected by these cost increases and market challenges. The company has announced plans to increase the price of the DuBois DBF008 watch from $10,800 to $14,500 due to the tariff.
The tariff is part of a broader U.S. strategy targeting Swiss exports to address the $39 billion U.S.-Switzerland trade deficit, hitting not only watchmakers but also other Swiss industries like machinery and food production.
Industry insiders expect the tariff to cause economic disruption, including increased short-time work and layoffs, particularly in the Jura Arc region, which houses many manufacturers. The tariff could cut potential growth in half, and indirectly lead to more unemployment in the Swiss economy. It could also knock between 0.3% to 0.6% off Swiss GDP growth over the next year.
Many in Switzerland had hoped for a deal similar to or better than the 15% that will be levied on most imports from the European Union. However, the situation is a broader issue affecting Switzerland, and talks are ongoing with the hope of eventually striking a deal.
The wider Swiss watch industry is feeling the pinch, planning price hikes, pausing US orders, and looking for alternative markets. There is a sense of shock in Swiss vintage watch boutiques due to the tariff hike. The US market was a focus for many watchmakers, and the tariff could lead to Americans no longer buying watches in the US.
CEO Thomas Steinemann stated that the US tariff on imports from Switzerland is a "huge disaster" for the watch industry. The US accounts for around 17% of Switzerland's total $32 billion of watch exports last year. Exports to the US surged in April as watchmakers frontloaded shipments ahead of a first tariff deadline, but this is not a long-term solution.
The situation could lead to putting the American market on pause and focusing on domestic sales. Some direct-to-consumer brands attempt to mitigate the impact by adjusting pricing strategies, but the 39% levy represents a major obstacle to competitiveness in the U.S market.
In summary, the 39% U.S. tariff imposes a substantial financial burden and market risk on Swiss watch brands, threatening industry recovery efforts amid global demand softness and currency headwinds.
- The increased tariff on Swiss imports, such as watches, is causing financial strain within the Swiss watch industry, forcing manufacturers to consider absorbing higher costs, reducing profit margins, or increasing retail prices.
- The U.S. market traditionally played a significant role in offsetting reduced demand in Europe and China for Swiss watch brands, but the 39% tariff may lead to decreased sales due to higher prices, potentially causing economic disruption and increased unemployment in Switzerland.
- The tariff's impact on the Swiss watch industry is part of a broader U.S. strategy addressing trade deficits with various countries, and it affects not only watchmakers but also other Swiss industries like machinery and food production.
