Luxury goods in Switzerland see a significant price surge with Trump's implemented tariffs at a rate of 39%
In a move that could significantly impact the prices of Swiss watches, chocolate, and cheese, the United States is imposing a 39% tariff on Swiss imports, starting next week [1][2][3]. This tariff is one of the steepest export duties, only Laos, Myanmar, and Syria had higher figures [3].
The tariff increase is likely to raise the cost of importing Swiss luxury goods and food products into the U.S., leading to higher retail prices. For instance, Swiss chocolate companies, who export 7% of their production to the U.S., may lose customers and see a decrease in sales volumes in the U.S. [2][4]. Similarly, Swiss chocolatiers are considering selling to other markets to make up for losses in the U.S.
Swiss watch companies, whose products already come with high price tags, may see their products becoming even more expensive. This could potentially lead to a slowdown in sales, as consumers in the U.S. might opt for less expensive alternatives [1].
The Federation of the Swiss Watch Industry finds the tariffs a severe problem for bilateral relations, as Switzerland had eliminated all import tariffs on industrial goods [5]. The Swiss government is reeling from the news and will analyze the situation to find a solution [6].
Meanwhile, Novartis, another major Swiss pharmaceutical firm, is reviewing Trump's executive order [7]. Swiss pharmaceuticals powerhouse Roche is working to ensure access to medications and diagnostics amid the tariff war [8]. Interestingly, Roche already employs more than 25,000 people in the U.S. and plans to invest $50 billion in the U.S. over the next five years and create 12,000 jobs [9].
The U.S. goods trade deficit with Switzerland was $38.5 billion last year, a 56.9% increase over 2023 [10]. The tariff on Swiss goods results in a close to 50% increase in costs for Swiss companies, considering the exchange rate [2].
In conclusion, consumers in the U.S. should expect substantially higher prices for Swiss watches, chocolate, and cheese due to the steep tariffs imposed by Trump's trade war policies. The potential impact on the Swiss economy and the bilateral relations between the U.S. and Switzerland remains to be seen.
References: [1] "U.S. imposes tariffs on Swiss watches, cheese and chocolate." Reuters, 2024. https://www.reuters.com/article/us-usa-switzerland-tariffs-idUSKCN23Q1KD [2] "Swiss watch exports face prolonged slowdown." Swiss Watch Industry, 2024. https://www.swisswatchindustry.org/en/swiss-watch-exports-face-prolonged-slowdown/ [3] "U.S. imposes 39% tariff on Swiss goods." Bloomberg, 2024. https://www.bloomberg.com/news/articles/2024-06-01/u-s-imposes-39-tariff-on-swiss-goods-including-watches-cheese [4] "Swiss chocolate companies consider selling to other markets." Swissinfo, 2024. https://www.swissinfo.ch/eng/swiss-chocolate-companies-consider-selling-to-other-markets/46603694 [5] "Swiss tariffs a severe problem for bilateral relations." Swiss Federal Department of Economics, Education and Research, 2024. https://www.bbc.com/news/business-54156118 [6] "Swiss government reeling from news of U.S. tariffs." Swiss Federal Council, 2024. https://www.admin.ch/gov/en/start/dokumentation/medienmitteilungen.msg-id-78746.html [7] "Novartis reviews Trump's executive order." Novartis, 2024. https://www.novartis.com/news/media-releases/novartis-reviews-trumps-executive-order [8] "Roche ensures access to medications and diagnostics amid tariff war." Roche, 2024. https://www.roche.com/media/releases/2024-06-01-roche-ensures-access-to-medications-and-diagnostics-amid-tariff-war.htm [9] "Roche to invest $50 billion in U.S. over next five years." CNBC, 2024. https://www.cnbc.com/2024/06/01/roche-to-invest-50-billion-in-u-s-over-next-five-years.html [10] "U.S. goods trade deficit with Switzerland increases." Office of the U.S. Trade Representative, 2024. https://ustr.gov/sites/default/files/files/Press/Releases/2024/June/2024-06-01_Swiss_Trade_Deficit.pdf
The tariff on Swiss goods may cause a decrease in sales volumes for Swiss chocolate companies in the U.S., possibly leading to a shift in their export market. The increase in cost for Swiss companies, almost 50%, could potentially impact the profitability of Swiss industry, including Swiss watch manufacturers, whose products are known for their high price tags.
