U.S.-Swiss tariff cut to 15% resets watch margins and pricing power
Bottom Line Impact
Tariff normalization should expand U.S. margins by 200-400 bps or support targeted price relief to drive volume, strengthening market share and protecting brand equity through disciplined harmonization.
Key Facts
5- Tariff rate on Swiss watch imports to the U.S. drops to 15% from 39%, a 24 percentage point reduction from the August levy.
- The U.S. is the largest single-country market for Swiss watches, accounting for about 20% of exports.
- Swiss brands raised U.S. prices by single digits up to roughly 15% after the August tariff shock.
- A final deal aligns Swiss watch tariffs with Japan and the EU at 15%, restoring parity with key competitors.
- Input pressures remain elevated: gold above $4,000 per ounce and a stronger Swiss franc against the U.S. dollar.
Time Horizons
Executive Summary
The U.S. will reduce tariffs on Swiss watches to 15% from 39%, removing a sudden cost shock that forced price hikes and shipment volatility since August. With the U.S. representing roughly one-fifth of Swiss watch exports, brands can stabilize pricing, restore wholesale momentum, and recapture margin while managing FX and gold cost headwinds.
Actionable Insights
Immediate Actions (Next 30-90 days)
Decide a two-speed pricing strategy: hold prices on scarce references, selectively roll back 3-5% on entry-to-mid SKUs to recapture volume and share.
Rationale: Captures tariff savings where pricing power is strong while unlocking demand elasticity and retailer support in volume lines.
Role affected:CEO
Urgency level:immediate
Reallocate 5-10% production to U.S.-destined SKUs with highest waitlist depth and top-door sell-through; pre-clear customs and expedite replenishment.
Rationale: Accelerates revenue capture in the largest single market and rebuilds channel inventory health post-tariff shock.
Role affected:COO
Urgency level:immediate
Short-term Actions (6-12 months)
Implement a 6-9 month CHF-USD and gold hedge program covering 50-70% of U.S.-bound COGS and lock in logistics contracts before shipment surge.
Rationale: Converts tariff relief into sustained margin protection and reduces volatility from FX and record-high gold prices.
Role affected:CFO
Urgency level:short-term
Launch targeted clienteling and trade marketing in top 25 U.S. cities emphasizing price stability and availability, avoiding broad promotions.
Rationale: Reassures clients, supports full-price sell-through, and leverages regained cost competitiveness without diluting brand equity.
Role affected:CMO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Policy reversal or delay in final implementation could reintroduce cost uncertainty.
- FX and commodity volatility (strong CHF, $4,000+ gold) could erode tariff-driven margin gains.
- Retailer pressure for price rollbacks may overshoot, risking brand equity and global price harmonization.
Primary Opportunities
- Gain 100-200 bps U.S. market share in 2025 via selective price normalization and faster replenishment.
- Rebuild wholesale relationships with improved terms tied to data-sharing and sell-through KPIs.
- Accelerate mix upgrade by prioritizing high-margin references while maintaining value entry points.