U.S. 39% tariffs jolt Swiss watchmakers: pricing, margins, market share
Bottom Line Impact
Absent calibrated pass-through and mix management, U.S. EBIT could compress 300-500 bps and cede share to non-Swiss rivals, while disciplined pricing and CPO expansion can stabilize revenue and protect brand equity despite higher landed costs.
Key Facts
5- The U.S. has imposed a 39% customs duty on Swiss goods, directly impacting all Swiss-made watches entering the country.
- Industry leaders report many brands pre-shipped inventory before implementation, creating an estimated 6-10 weeks of buffer for sell-through at pre-tariff landed costs.
- The U.S. accounts for roughly 16-18% of Swiss watch export value by revenue; a sustained tariff threatens a high single-digit percentage of sector EBIT tied to U.S. sales.
- At a 39% duty, a 10,000 USD watch incurs 3,900 USD in tariffs; holding gross margin dollars constant typically requires a 15-25% MSRP increase depending on channel mix and retail margins.
- FSWI leadership urges the Swiss government to prioritize a negotiated solution with U.S. counterparts in the near term.
Time Horizons
Key Roles Affected
Executive Summary
A 39% U.S. import duty on Swiss goods immediately disrupts pricing, margins, and allocation for Swiss watch brands, though pre-shipped inventory offers a short-lived buffer. Executives must decide within weeks how much of the tariff to pass through to MSRP versus absorb in margins, while accelerating negotiations and reallocating product and spend to protect U.S. sell-through.
Actionable Insights
Immediate Actions (Next 30-90 days)
Implement a tiered pass-through strategy: 70-90% for constrained halo SKUs, 40-60% for core icons, 20-40% for entry lines, with a two-step MSRP update over 60 days.
Rationale: Optimizes price elasticity by segment to preserve volume where demand is sensitive while protecting margins where scarcity supports pricing power.
Role affected:CEO
Urgency level:immediate
Negotiate temporary retailer margin sharing of 200-300 bps and deploy SKU-level contribution modeling to guide allocation of pre-shipped inventory to top-quartile doors.
Rationale: Shares tariff burden across the chain and directs scarce pre-tariff inventory toward highest return channels to protect EBIT.
Role affected:CFO
Urgency level:immediate
Coordinate an industry coalition to engage Swiss authorities and USTR with a 60-90 day advocacy plan, supported by economic impact analysis and retailer testimony.
Rationale: Raises likelihood of carve-outs, phased application, or partial relief while demonstrating shared interest across stakeholders.
Role affected:Head of Public Affairs
Urgency level:immediate
Short-term Actions (6-12 months)
Reframe value communication in the U.S. with craftsmanship and longevity narratives; expand certified pre-owned trade-in and financing penetration to 25-35% of U.S. transactions.
Rationale: Offsets price shock for price-sensitive cohorts and retains brand consideration by lowering effective out-of-pocket cost.
Role affected:CMO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Demand shock in entry and mid-tier price bands under 3,000 USD leading to double-digit unit declines in the U.S.
- Retailer solvency and inventory risks if price resets outpace consumer acceptance, triggering higher returns and markdowns.
- Policy persistence or escalation extending beyond 12 months, locking in structurally higher U.S. landed costs.
Primary Opportunities
- Price-mix upgrade as allocation shifts toward higher-ASP SKUs with stronger pricing power and lower elasticity.
- Acceleration of certified pre-owned and trade-in programs to capture value-conscious demand and protect new watch sell-through.
- Share gains for brands with agile pricing, strong waitlists, and direct-to-consumer capabilities versus slower-moving peers.