In a landmark development for the global luxury market, Switzerland and the United States have brokered a crucial agreement to de-escalate a trade dispute that had cast a long shadow over the prestigious Swiss watch industry. The punishing 39% tariff imposed by the U.S. will be dramatically reduced to 15%, a figure that, while still significant, brings a collective sigh of relief to an industry that had been bracing for severe economic disruption. This resolution marks the culmination of months of intense uncertainty, high-stakes negotiations, and a direct appeal from the titans of Swiss watchmaking to the White House.
The Shockwave of a 39% Tariff
The crisis erupted in August when the Trump administration, in a sudden and sweeping move, imposed a 39% ad valorem tariff on all goods imported from Switzerland. This decision, reportedly stemming from a “disagreeable” phone call between President Trump and Swiss President Karin Keller-Sutter, was part of a broader “reciprocal duty” agenda aimed at correcting perceived trade imbalances. While the administration’s stated focus was often on the pharmaceutical sector, the broad-based nature of the tariff meant that Switzerland’s most iconic export—its meticulously crafted timepieces—was caught directly in the crossfire.
For an industry that relies on the United States as its single largest export market, accounting for approximately 20% of shipments, the levy was nothing short of a seismic jolt. It represented one of the highest tariff rates imposed on any Western nation, creating a level of trade friction unseen since the 1930s.
The Immediate Economic Fallout
The impact was both immediate and severe. The Federation of the Swiss Watch Industry (FH) released statistics showing a staggering 56% year-over-year drop in U.S. imports of Swiss watches in September. The FH aptly described the decline as “expected but nonetheless extraordinary.”
This sudden trade barrier plunged brands into a state of strategic chaos. Watchmakers were confronted with an impossible choice: absorb the massive new cost and eviscerate their profit margins, pass the increase on to American consumers and risk a collapse in demand, or redirect their focus away from their most important market. The situation was particularly dire for independent jewelers and smaller brands, who lacked the financial cushion of the large luxury conglomerates to weather such a storm. This very concern prompted the American Watch Association and the Jewelers Vigilance Committee to file an amicus brief with the U.S. Supreme Court, arguing that the levies could disproportionately harm independent American businesses.
Industry on the Brink: Navigating the Crisis
Faced with an existential threat, the Swiss watch industry responded with a mixture of preemptive action and strategic patience. The period leading up to the tariff’s implementation saw a frantic rush to move products onto American soil.
A Calculated Scramble
Oliver R. Müller, the founder of Luxeconsult, a respected Swiss firm that advises the watch business, noted that “watch brands built up substantial overstocks on U.S. soil” in anticipation of the trade barrier. This surge in shipments was a short-term gamble to create a buffer and delay the immediate impact on consumers. In April 2025, ahead of an earlier tariff threat, exports to the U.S. surged by over 150% as brands rushed to build up inventory.
Once the 39% tariff became a reality on August 7, many brands were forced to act. Price increases became unavoidable, with some of the most prominent names in horology, including Patek Philippe, Cartier, and Breitling, raising their U.S. prices by anywhere from 5% to 15% to partially offset the new duty. However, Müller observed that many also chose to “wait and avoid an unnecessary price increase on top of other headwinds,” such as a historically strong Swiss franc and the soaring price of gold and other precious metals. These compounding factors were already squeezing margins and making Swiss timepieces more expensive for international buyers.
Voices of Concern
The gravity of the situation was not lost on industry experts. Müller provided a stark analysis, calculating that the 39% tariff “would have meant a 12–14% increase at retail, which is far from being marginal.” Such a hike threatened to push many potential buyers out of the market, particularly in the more accessible luxury segments.
The concern was echoed across the Atlantic. Sara Yood, the president and CEO of the Jewelers Vigilance Committee, became a key voice in monitoring the fluid situation, working to provide clarity for American retailers who were left in a state of limbo.
The Road to Resolution: Diplomacy and a White House Summit
As the economic damage mounted, it became clear that a resolution required intervention at the highest levels. The turning point came just a week before the deal was announced, when an elite delegation of Swiss business leaders secured a direct meeting with President Trump at the White House.
High-Stakes Diplomacy
The meeting in the Oval Office was a veritable who’s who of the luxury world. The delegation included Jean-Frederic Dufour, the influential CEO of Rolex; Johann Rupert, the powerful chairman of the luxury conglomerate Richemont (which owns Cartier, IWC, and Vacheron Constantin, among others); and Alfred Gantner, a co-founder of Partners Group, the private equity firm that controls Breitling.
In a joint statement, the executives clarified that their visit was undertaken at their own initiative to underscore the deep and longstanding economic ties between the two nations, emphasizing that they were not there to negotiate but to support the official talks between their governments. The visit was a powerful symbol of the industry’s unified front and its determination to find a solution. In a gesture reflecting the spirit of the meeting, Dufour reportedly gifted the president a Rolex table clock.
A “Misunderstanding” Resolved
Johann Rupert of Richemont later expressed his optimism to the press, framing the trade dispute as a “misunderstanding” that was close to being resolved. He eloquently stated, “Swiss and Americans are very similar: independent, reluctant to accept heavy-handed government. So I think this misunderstanding will be resolved.” His words hinted at a breakthrough, suggesting that the personal diplomacy had been effective. He had previously described the 39% tariff as “potentially devastating for the whole of Switzerland,” revealing that the levy had already cost Richemont approximately €50 million in the first half of the financial year alone.
A New Dawn: The 15% Agreement
The efforts of both industry leaders and government officials paid off. The White House and the Swiss government jointly announced a “non-binding memorandum of understanding” to lower the tariff rate from 39% to a more sustainable 15%.
The Terms of the Deal
This new rate aligns Switzerland with the 15% tariff level applied to other watch-producing nations and regions, including Japan and the European Union, restoring a sense of parity to the market. The agreement was not a one-sided concession. In return for the tariff reduction, Swiss officials confirmed their commitment to significant investments in the United States, and Switzerland agreed to reduce its own import duties on a range of American products, including granting duty-free quotas for certain agricultural goods like beef and poultry.
U.S. Trade Representative Jamieson Greer confirmed that an agreement had “essentially” been reached, citing a “new dynamic” in the discussions. The Swiss government publicly thanked President Trump for the “constructive engagement,” signaling a formal end to the trade standoff.
Cautious Optimism for the Future
The news was met with widespread relief. Yves Bugmann, head of the Federation of the Swiss Watch Industry, stated the deal would provide much-needed security after the profound uncertainty created by the 39% threat.
Oliver R. Müller of Luxeconsult declared the reduction a “huge relief for the whole Swiss economy and more specifically for our watch industry.” He argued that the new 15% rate fundamentally changes the outlook. “Lowering the tariffs from 39% to 15% will avoid the price increases that would have become necessary to absorb the tariffs,” he explained. “At 15%, I consider that the cost increase has been priced in, and that’s good news for the people selling Swiss-made watches in the U.S.”
However, questions about the timing remain. Sara Yood of the Jewelers Vigilance Committee noted that a White House statement pointed to a hope of concluding negotiations by early next year. “That implies that this will not be finalized until early 2026, but I don’t know if we’ll get the lower rate sooner,” Yood commented, highlighting a remaining element of uncertainty.
For now, the Swiss watch industry can look to the future with renewed confidence. The crisis has been averted, and while the 15% tariff will still present challenges, it replaces a crippling levy with a manageable business cost. The ordeal has served as a stark reminder of the globalized nature of the luxury market and the profound impact that geopolitical tensions can have on an industry built on centuries of tradition, precision, and stability.
