Swiss watch giant complains: It's already expensive not to produce in China, adding 39% is hard to bear

On the evening of July 31 local time, the United States announced a hefty tariff of up to 39% on Switzerland, bringing "a little bit" of Trump shock to this small European country celebrating its National Day.

The new tariff policy will take effect this Thursday (August 7). As the ticking of the clock goes on, time passes second by second, and Nick Hayek, CEO of Swiss watch giant Swatch Group (SWATCH), feels increasingly uneasy.

According to Reuters on the 4th, the US is the largest export market for Swiss watches. Affected by the tariff news, the stock prices of Swiss watch and luxury companies, including Swatch, fell nearly 5% on Monday, then narrowed the decline.

On Monday local time, Hayek said in an interview with British media that as the largest Swiss watch manufacturer, Swatch is trying to cope with the changes. However, a major challenge for the industry is that Swiss watches need to meet a 60% domestic production ratio, making it difficult to transfer production to other regions.

He complained, "All our products are made in Switzerland, not in China, and the cost is already high. Plus a 39% tariff, we can't absorb it, so the price will definitely go up."

When interviewed, Hayek did not reveal specific increases. However, after Trump initially announced the tariff increase in April, Swatch had already raised prices by 5%.

Hayek explained that when Trump launched the first global tariff at the beginning of the year, the group had already started shipping additional inventory to the US. Trade data shows that Swiss watch exports surged in April.

"We have shipped more products to the US, which means we won't be directly affected in the short term," he added. Swatch has at least 3 to 6 months of inventory in its warehouses and stores in the US, forming a short-term buffer.

According to data from Jefferies, the US market contributed 18% of Swatch's sales in 2024. Hayek said that demand for its watch products in the US market remains strong, and the group plans to ship a small amount of additional inventory before the tariff takes effect.

At the same time, Swatch is also targeting American consumers traveling abroad. "Customers are mobile," Hayek said.

"Americans have many choices; they travel all over the world," he said, using cruise ship shops as an example. "Even if prices rise domestically in the US, they will continue to buy (elsewhere)."

However, Swatch still urgently hopes that the Swiss government will reach a trade agreement with the US as soon as possible to avoid the 39% tariff taking effect. He urged Swiss Federal President Keller-Zuerrer to visit the US quickly to resolve the issue, "She should fly to Washington. This would greatly increase the possibility of reaching an agreement."

"It's not the end of the world. Of course, a settlement can be reached. Why was the tariff originally scheduled to take effect on August 1st, but postponed to the 7th? The door for negotiations has always been open," he said.

However, Hayek also admitted that the success of the negotiations depends on Trump, "The key lies in his attitude. What others say doesn't matter."

Original article: https://www.toutiao.com/article/1839598059038787/

Statement: This article represents the views of the author.