Swiss Watch Exports Fell Again in October on US Tariff Hit
TL;DR
Swiss watch exports fell for a third month in October, with a 4.4% drop due to US tariffs. Exports to the US plunged 47%, but China saw growth, offering some relief.
Key Takeaways
- •Swiss watch exports declined 4.4% in October, marking the third consecutive monthly drop.
- •Exports to the US, the largest market, fell sharply by 47% due to high tariffs.
- •China's exports grew for the second month, indicating a potential easing in the luxury downturn.
- •A recent US tariff reduction to 15% may aid recovery, but no specific implementation date is set.
- •The broader Swiss export sector was affected, with overall exports to the US also retreating.
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Swiss watch exports fell for a third month as US President Donald Trump’s trade tariffs continued to weigh on the industry.
Watch exports fell 4.4% in October from a year earlier to 2.2 billion Swiss francs ($2.7 billion), the Federation of the Swiss Watch Industry said Thursday. Exports to the US — the largest market — slumped 47%. China, though, grew for a second month, adding to recent signs that a luxury downturn may be easing.
US tariffs have been the dominant narrative in the Swiss watch industry since Trump imposed a 39% import levy on Switzerland — higher than the European Union and other developed economies — that went into effect on Aug. 7.
Read More: Swiss Tariff Deal Brings Relief to Struggling Watchmakers
Watchmakers and other Swiss exporters finally got some good news last week when the US said it would cut the tariff to 15% — though there is no specific date for the new agreement to take effect. Citigroup analyst Thomas Chauvet said he doesn’t expect exports to the US to recover until the new rate kicks in.
Many producers had rushed to build up inventory in July to avoid the new levies, which left watchmakers controlled by the likes of Richemont, Swatch Group AG and LVMH, as well as independents including Audemars Piguet, Patek Philippe and Rolex SA, facing diminished margins in their key market.
Manufacturers of watches, machines and precision instruments were among sectors hit hardest by the 39% levy, according to Switzerland’s central bank. But the latest data underscores how the impact extended beyond them, with Switzerland’s overall exports to the US also retreating in October.
Read More: Swiss Exports to US Slipped in Last Full Month of 39% Tariffs
Speaking on the day the tariff reduction was announced, Breitling AG Chief Executive Officer Georges Kern said he welcomed the cut, though he said the industry wanted to see the original levy of 2% reinstated. Swiss-made watches do not compete with domestic production or jeopardize jobs in the US, he added.
“The Swiss watch industry is further an important employer in the US, both for repair services and retail operations,” he said in an interview.
Meanwhile, exports to China were up 13%, while Hong Kong and Singapore also grew in October. Prices for lower-valued watches rose, though that was partially offset by a sharp 7% decline for watches priced at over 3,000 francs, the Federation of the Swiss Watch Industry said.
“Signs of improvement in China and continued strength in the Middle East contrast with a resilient — but hardly dynamic — Europe and lingering uncertainty in the United States,” said Vontobel analyst Jean-Philippe Bertschy. “A handful of flagship brands are masking what remains a very challenging backdrop for the broader Swiss watch sector.”