Swiss watch exports slide again with US down 47% even as China rebounds
Manufacturers of watches, machines and precision instruments are among sectors hit hardest by the 39% levy
[ZURICH] 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 per cent in October from a year earlier to 2.2 billion Swiss francs (S$3.6 billion), the Federation of the Swiss Watch Industry said on Thursday (Nov 20). Exports to the US – the largest market – slumped 47 per cent. 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 per cent import levy on Switzerland – higher than the European Union and other developed economies – that went into effect on Aug 7.
Watchmakers and other Swiss exporters finally got some good news last week when the US said it would cut the tariff to 15 per cent – though there is no specific date for the new agreement to take effect. Citigroup analyst Thomas Chauvet said he does not 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 and LVMH, as well as independents including Audemars Piguet, Patek Philippe and Rolex, facing diminished margins in their key market.
Manufacturers of watches, machines and precision instruments were among sectors hit hardest by the 39 per cent 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.
Speaking on the day the tariff reduction was announced, Breitling chief executive officer Georges Kern said he welcomed the cut, though he said the industry wanted to see the original levy of 2 per cent reinstated. Swiss-made watches do not compete with domestic production or jeopardise 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 per cent, while Hong Kong and Singapore also grew in October. Prices for lower-valued watches rose, though that was partially offset by a sharp 7 per cent 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 US,” 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.” BLOOMBERG
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