Column: US tariffs - the Swiss watch industry and the loud silence
Column: US tariffs - the Swiss watch industry and the loud silence
It is questionable whether, in view of the seemingly chaotic tariff policy of US President Donald Trump, all Swiss watch bosses will remain as seemingly relaxed as Breitling CEO Georges Kern.
"I'm 60 years old now, I've seen it all: every crisis, every board, every excitement. I'm definitely not panicking," he said recently in an interview with the Swiss Handelszeitung.
Asked specifically about the proposed 31 percent tariff on all goods imported from Switzerland into the United States, he said: "Obviously, tariffs aren't helpful. But it can be assumed that things aren't as hot as they come."
Perhaps Kern is right, is simply well prepared, or—as he himself suggests—is simply a seasoned pro. And at the same time, he unwaveringly believes in the enduring appeal of Swiss luxury watches.
"It's a difficult situation, but it would be wrong to freeze like a mouse in front of a snake. Now it's important to pursue the strategy you believe in and position yourself well, despite everything. When times change again—and they will—you'll be ready to grow stronger again," he said in an interview with Handelszeitung, assessing the current situation.
It should not be forgotten that demand in the important Chinese market has been weakening for some time. The USA, which at one point was an export nation for Swiss watches, was perfectly positioned to offset the slump in demand, has also been developing rather erratically in recent months. Much like the US president, one cannot rely on a clear direction – even without mega-tariffs.
But what is the current status regarding Switzerland and Trump's US tariff hammer?
Currently, the tariff threats for Switzerland, which were trumpeted by Donald Trump to the world and to Switzerland on the so-called Liberations Day, are suspended until July 9.
Meanwhile, the Alpine republic is hoping for quick solutions – or deals – à la China and Great Britain and is relying on negotiations with the USA.
A quick solution is “in the interest of both countries,” said Swiss Finance Minister Karin Keller-Sutter last Friday, as Watson magazine reported yesterday.
Her US counterpart, Scott Bessent, clarified on Monday: "Britain and Switzerland have been at the front of the queue for a trade agreement, while the EU has been much slower."
But the principle of hope alone will not be enough if things turn out to be as hot as they were promised – to return to Georges Kern’s state of mind.
Whether a potential tariff increase – regardless of the extent – will enable the rising costs to be shared equally is certainly a pipe dream, but also a very ambitiously optimistic one. Luxury buyers are also becoming increasingly price-conscious.
Sharing the burden—reducing margins for brands and retailers or distributors, and increasing prices for the end customer—is conceivable. But is it realistic? Luxury shoppers are also becoming increasingly price-conscious.
There's no sign of a strategy from the Swiss watch companies anywhere. The industry is practicing one of its best skills: loud silence.
Should we rely on the assumptions of some analysts that luxury demand in the Chinese market will pick up again? That the huge Indian market is truly on the rise? And that the Middle East will remain stable?
Will that be enough given the overall cooling of the global luxury market?
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