Switzerland won a reduction in steep tariff rates imposed by the U.S, bringing welcome relief to the Swiss watch industry suffering under the levies. The White House and the Swiss government said tariffs will drop to 15% down from the 39% imposed in August that sideswiped Swiss watchmakers and prompted some of the biggest brands to raise prices after rushing to ship watches to the U.S. before the duties, the highest in the developed world, kicked in.
“Switzerland and the U.S. have successfully found a solution: U.S. tariffs will be reduced to 15%. Thanks to President Trump for the constructive engagement,” the Swiss government said in a post Friday on X, the social media platform. U.S. Trade Representative Jamieson Greer said in an interview with CNBC that an agreement had “essentially” been reached that would see Swiss companies in the pharmaceutical and gold refining sectors build plants in the U.S.
The agreement was reached due to a “new dynamic” in discussions with the White House achieved in recent days, Guy Parmelan, Switzerland’s Minister of Economic Affairs, said at a press conference in Bern, Friday. The head of the Federation of the Swiss Watch Industry, Yves Bugmann, told news agency AWP, that the deal would provide relief for the sector and “gives us a bit more security after the wave of uncertainty brought on by the 39% threshold.” The U.S. is the biggest single country market for Swiss watch exports, accounting for about 20% of shipments.
The shift in policy follows a visit to the White House by a group of Swiss business leaders that included Rolex Chief Executive Officer Jean-Frédéric Dufour, Richemont Chairman Johann Rupert, and the head of private equity firm Partners Group, which controls Breitling. The meeting, which participants said was aimed at strengthening economic ties and relations between the two nations, and not a negotiation, also included top executives from the Swiss gold-refining and commodities-trading industries.
Parmelin, the Swiss minister, was in Washington, D.C. on Thursday this week to meet with White House Trade Representative Greer, among others, in talks that were described as “extremely positive” in reaching an agreement. A final deal would align Swiss import tariffs to the U.S. with other watch-producing nations and regions, including Japan and the European Union, at 15%. Swiss brands, from Patek Philippe to Omega and Jaeger-LeCoultre, have increased prices in the U.S. by single-digit percentages and by as much as 15% to try and offset the impact of the high duties. Adding to Swiss watchmaker price pressures, the Swiss franc has appreciated sharply against the U.S. dollar while the price of gold, a key component in luxury watches, has surged to record highs above $4,000 an ounce.