Swiss watchmakers rise on optimism over possible reduction in Trump tariffs
The US is the biggest market for Swiss watches, accounting for 19% of all the exports
[ZURICH] Shares of Richemont and Swatch Group, owners of luxury Swiss watch brands, rose on Tuesday (Nov 11) after US President Donald Trump said he was working with Switzerland on a deal to lower the 39 per cent tariff rate on Swiss exports to the US.
Shares of Swatch, whose brands include Omega, Tissot and Longines, gained 4.2 per cent in early trading. Richemont, which owns Cartier, IWC and Piaget, was 2 per cent higher.
Trump announced at the end of July that Swiss exports to the US would be subject to a 39 per cent tariff from Aug 7, among the highest duties levied in his global trade reset.
The Swiss government declined to comment on Monday after Bloomberg reported Bern was close to reaching a deal to reduce tariffs on its exports to 15 per cent.
“We’re working on a deal to get their tariffs a little bit lower,” Trump said on Monday. “I haven’t set any number, but we’re going to be working on something to help Switzerland.”
Swatch said on Tuesday it would not comment on any deals before they had been implemented.
Richemont did not respond to a request for comment.
Biggest market for Swiss watches
The US is the biggest market for Swiss watches, accounting for 19 per cent of all Swiss watch exports, according to the Swiss watch industry federation.
“Resolving the tariff dispute would be an early Christmas present for both listed Swiss luxury players and for the whole Swiss watch industry,” said Zuercher Kantonalbank analyst Patrik Schwendimann.
The US is also the biggest market for luxury group Richemont – whose other brands include Cartier, Van Cleef & Arpels, Chloe and Montblanc – accounting for an estimated 21 per cent of group sales last year, Schwendimann said. Swatch generated 15 per cent of its sales there, he said.
Swatch had a higher exposure to US tariffs because most of its exports came from Switzerland, while more than half of Richemont’s exports do not originate in Switzerland, Schwendimann said, referring to jewellery made in Italy and France.
Kepler Cheuvreux analyst Jon Cox said a cut in tariffs to 15 per cent would ease pressure on profitability.
“Price increases can also put off consumers, who might either shop abroad or buy a product that was not made in Switzerland,” said Cox. REUTERS
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