Trump’s 39% Tariffs on Swiss Goods Challenged: Watch Industry Impacts

On April 2, the Trump Administration announced some sweeping new tariffs on goods imported into the United States. In addition to a 10% baseline tariff on imported goods, higher “reciprocal tariffs” were set to begin April 9 for countries with large trade surpluses with the United States (meaning countries that sell us stuff way more than they buy our stuff). Switzerland is very much one of those countries, which is why the executive order signed by President Trump was set to impose a 31% tariff on Swiss goods imported to the USA. Although the tariff increases had been temporarily paused, causing many (including us) to be optimistic about negotiations, things went the other direction, and a 39% tariff on Swiss goods took effect August 7, 2025. But a recent ruling will force Trump to defend his tariffs in court in October. I’ll quickly go over how the Trump tariffs on Switzerland might affect the luxury watch world.

The official name of the executive order is “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.” You can read it here.

Didn’t an Appeals Court Strike the Tariffs Down?

Yes, on August 29, 2025, a U.S. federal appeals court ruled that most of the Trump-imposed global tariffs, including the 39% tariff on Swiss imports, were illegal under U.S. law. However, the court also allowed the tariffs to remain in effect temporarily while the government appeals to the Supreme Court, so immediate relief has to wait until at least October 14 for the next court date.

When Did the 39% Trump Tariffs Take Effect?

The 39% tariff on all Swiss goods coming into the USA took effect at 12:01 AM EDT on August 7, 2025. The 10% baseline tariffs had begun at 12:01AM Eastern Time on April 5. The countries with higher “reciprocal” tariffs were set to ratchet up to their increased rates at 12:01AM on April 9, but later that day Trump paused them. Some countries were more successful at negotiation during the pause than others, so higher tariffs were unveiled August 1.

Didn’t Trump Call Off the Tariffs?

Trump had announced a 90-day pause on the reciprocal tariffs on April 9, allowing time for negotiations with the 60+ countries on the reciprocal tariff list. While Switzerland hoped to have fruitful discussions with the Trump administration that would result in a much lower tariff than 31% by the July 31 deadline, well, the opposite happened.

Why are the Tariffs So High?

President Trump has expressed disdain about Americans paying higher drug prices than other developed countries, repeatedly stressing that drugmakers should give the U.S. “Most Favored Nation” (MFN) pricing. Theoretically these high tariffs could force pharma companies to lower their U.S. prices to match those in countries like Switzerland, where prices are often less than half. Trump’s frustration (and the resulting 39% figure) might have less to do with Swiss import policy than the structure of global drug pricing. As low drug prices for Americans are a stated goal for Trump, he has exempted Swiss drugs from tariffs.

Whitehouse.gov originally said that the tariffs were designed to be in place “until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated.” So, at least in theory, they’re not designed to be permanent. Trump seems to want Switzerland (and all the other countries with huge trade surpluses with the US) to commit to buying more American stuff, too. During his first term, Trump negotiated agreements with several countries that included promises to increase US purchases.

How Much Does Switzerland Currently Tariff the US?

Switzerland charges 0 tariffs on industrial goods, luxury goods, or pharmaceutical coming from the USA. But they do charge tariffs on some things, notably agricultural goods.

“Switzerland tends to impose low tariff rates on overall imports, with an average 2016 rate of 6.3%. While non-agricultural goods only faced an average tariff rate of 1.7% in 2016, duties of 34.2% were applied to agricultural goods, and animal and dairy products saw tariffs of 110% and 133.2%, respectively.”

PrivacyShield.gov

Trump presented a chart with tariffs charged on American goods by various countries, and Switzerland showed “61%” but on the whole, Switzerland’s tariffs on US goods are mostly low aside from animal and dairy products. Some math sleuths on Reddit figured out that the percentages shown on the board seemed to be reflecting trade deficits rather than tariffs.

Who Pays the Tariffs?

Tariffs are paid by the entity that imports the goods into the US. So, with the current tariffs in place, a company like Rolex USA will have to pay 10% of the declared value. Note that the declared value of bulk imports is at wholesale rates. For retail orders shipped directly to an American consumer from Switzerland, however, the consumer would be responsible for the full tariff (39%) calculated at the full retail value.

How Much Will the Trump Tariffs Increase US Watch Prices?

It’s up to the importer what to charge their customers; they can choose how much of the increase they will “eat” if any. Most people, however, expect Trump’s increased tariffs to be passed on to the consumer. This doesn’t necessarily mean Swiss watches will go up by 39%, however. Because the tariff is paid on the wholesale rate, in total dollars the tariff will equate to closer to 20-25% of MSRP for most brands. Wholesale purchasers won’t want to pay higher costs for the same total profit though. If the Trump tariffs stick around, I think 25% price increases could certainly be a reality, but the market will only bear what the market will bear. Higher prices for Swiss watches likely will simply cause demand to drop off.

That’s just for watches with a wholesale market, though. For watches directly shipped to consumers from Switzerland, the consumer will have to pay US Customs 39% of the retail value. American participants in the M.A.D.2 raffle, for example, were already all emailed and offered a chance to cancel their spot because of the tariffs if they wished. So the implications have already begun, even though that email was sent when the threatened tariff rate was only 31%. A. Lange & Sohne took the opposite approach and in mid-2025 offered some of their customers to prepay for their orders at then-current prices–so they’ll definitely have to eat some profit margin on those pieces unless Swiss-US trade negotiations thaw.

Will the Trump Tariffs Cause Rolex to Raise Prices Worldwide?

It’s very unlikely that Rolex will raise prices for all countries based on this. Rolex is very specific about the MSRP they charge in each country. If they need to increase the MSRP in a certain country because of tariffs or currency devaluation, they do it. They already raised US prices twice this year and presumably will again soon.

While Rolex prices in various countries are mostly the same-ish when you convert the local MSRP to US dollars, they’re certainly not inextricably linked. So Rolex (and other brands, but that’s the one we get asked about the most) could certainly raise prices just in the US specifically.

How Will This Affect Grey Dealers Like Luxury Bazaar?

Well, secondhand watch dealers like Luxury Bazaar buy goods for current market wholesale rates, and sell them for current market retail rates. If the Trump tariffs cause Swiss watch prices to go up, then we’ll have to pay more to get watches and also charge more. There might be a bit of a flurry to snap up used watches before the price increases on new watches (presumably) trickle down to the pre-owned market, but I’m not expecting any sudden tornado of demand for luxury goods in this market. We’ll see.

Ultimately, whether the market price goes up or down, grey dealers are always trying to do the same thing: sell their inventory as soon as possible and make the margin they need to make. But, despite all the hubbub about Veblen goods, high prices–even of luxury goods–generally aren’t good for demand. Massive price hikes are not good news for us.

Will This Make Japanese and German Watches More Attractive?

Japan and Germany are only facing 15% tariffs–which sounded shocking earlier in 2025 but doesn’t sound so high anymore. That’s a good deal less than 39%. I think there could absolutely be a relative uptick in American demand for Grand Seiko and A. Lange & Söhne watches.

Will the Trump Tariffs Cause Switzerland to Retaliate?

Karin Maria Keller-Sutter, who has been President of Switzerland since 2019, called the Trump tariffs “incomprehensible,” noting their longstanding commitment to free trade. She made an unsuccessful last-ditch in-person effort in Washington, D.C. to negotiate lower tariffs on August 7, 2025, and according to Bloomberg she returned to Switzerland without even meeting with Trump himself.

But, Reuters reported that the Swiss government had no plans to economically retaliate in April and that still seems to be the case…for now. We’ll keep you updated.