Swiss watchmaker Swatch Group (UHR.S) is in trouble with United States (U.S.) tariffs as time runs out. Swatch Group is the third-largest Swiss watchmaker by revenue, after Rolex and Richemont, which produces IWC, Jaeger-LeCoultre, and Cartier watches.
U.S. President Donald Trump last week imposed 39% tariffs on most goods made in Switzerland, which will take effect on Thursday. The country known for its luxury watches, chocolate, and banks is rushing to obtain a delay.
Trump’s tariffs are aimed at removing global trade imbalances and have shaken companies worldwide, prompting many brands to change supply chains and sales channels. Few are more recognizable than Swatch, which became famous for its plastic watches.
The U.S. is the largest export market for Swiss watches.
Shares of Swiss watch and luxury goods companies, including Swatch, fell nearly 5% on Monday after the news of the tariffs, before trimming losses.
Swatch Group, the largest Swiss watchmaker by sales volume, is trying to adapt. The company has pre-loaded shipments to the U.S., is relying on U.S. customers while they travel abroad, and has also raised prices.
Part of the challenge for the industry is that 60% of Swiss watches must be produced in the country, making it difficult to move production elsewhere.
“We produce everything in Switzerland, not in China. And we have high costs. And when you add a 39% tariff, we cannot absorb that. So prices will definitely go up,” said CEO Nick Hayek.
Swatch Group, which also owns Swiss luxury watch brands such as Omega, Tissot, and Longines, already raised prices by 5% after Trump’s initial tariff announcement in April this year.
Hayek explained that the company began delivering extra stock to the U.S. earlier this year, when Trump’s initial wave of global tariffs hit. Swiss watchmakers generally recorded an increase in exports in April, trade data shows.
“We delivered many more products to the U.S., so that means there is no immediate impact on us,” he said, adding that Swatch has at least three to six months’ worth of U.S. inventory in warehouses and stores, providing short-term protection from high tariffs.
The company plans to deliver “a little more” stock over the next few days before the tariffs take effect.
Hayek said that demand for their watches in the U.S. remains strong for now.
