Swatch Group lifts US prices 5-15% to offset 39% tariffs and sustain demand
Bottom Line Impact
If executed with precise pricing and channel reallocation, Swatch Group can largely neutralize the tariff at the P and L level, sustain US demand, and modestly lift ASP and brand equity while defending market share against peers facing the same headwind.
Key Facts
5- US price increases set at 5 to 15 percent across brands, effective immediately
- Tariff rate at 39 percent on Swiss imports into the US, imposed last month
- US performance up around 15 percent in local currency through end August across all brands
- MoonSwatch Moonshine Gold price raised to 450 dollars from 400 dollars, a 12.5 percent increase
- Assuming ex factory at 25 to 35 percent of MSRP, the tariff equals roughly 9.8 to 13.7 percent of MSRP, implying near full offset with a 10 to 15 percent price rise
Time Horizons
Key Roles Affected
Executive Summary
Swatch Group will raise US prices by 5 to 15 percent to counter a 39 percent tariff on Swiss imports, while US demand remains resilient with roughly 15 percent growth through August. The move seeks to preserve margins via price mix, transfer pricing, and channel shifts to Canada, Mexico, and duty-free cruise retail, minimizing volume erosion and arbitrage.
Actionable Insights
Immediate Actions (Next 30-90 days)
Model tariff pass through by brand and channel using ex factory to MSRP ratios and set brand specific price corridors at 8 to 15 percent
Rationale: At 25 to 35 percent ex factory, the 39 percent tariff equals 9.8 to 13.7 percent of MSRP, enabling precise pricing to preserve GM with minimal elasticity damage
Role affected:CFO
Urgency level:immediate
Launch transparent price communication and limited editions that emphasize scarcity and US exclusive value to sustain pull at higher price points
Rationale: Maintains brand equity and reduces price sensitivity while converting demand to higher margin SKUs amid price increases
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Rebalance North America channel mix by shifting 10 to 20 percent of US allocated units for entry and mid price SKUs to Canada, Mexico, and cruise duty free
Rationale: Border and travel retail can absorb demand with lower effective duty burden, protecting volume and reducing grey market pressure in the US
Role affected:CEO
Urgency level:short-term
Pre position 6 to 8 weeks of incremental inventory in Canadian and Mexican DTC hubs and expand bonded inventory for cruise retail
Rationale: Mitigates US tariff headwinds by capturing diverted demand and shortens lead times to capitalize on cross border flows
Role affected:Head of Supply Chain
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Demand elasticity at entry price points causing 5 to 10 percent unit declines in US multibrand retail
- Price gap driven arbitrage and grey market inflows from EU and Canada eroding brand control
- Policy volatility including further tariff escalation or retaliatory measures
Primary Opportunities
- Price mix upgrade in US lifting ASP by 3 to 6 percent and supporting 100 to 300 bps GM protection
- Travel retail and cruise channel expansion adding 2 to 4 points to North America revenue mix
- Data driven regional pricing harmonization reducing arbitrage by 20 to 30 percent