NextFin news, On November 11, 2025, Georges Kern, the CEO of Breitling, one of Switzerland’s leading luxury watchmakers, spoke publicly about the significant negative impact of the 39% tariffs imposed by the U.S. under President Donald Trump's administration. These tariffs, initiated as part of trade measures increased in August 2025, target Swiss exports to the United States, particularly affecting high-value luxury items such as watches. The comments were made during a CNBC International Live interview in which Kern described the tariffs as 'horrible' for Switzerland, explicitly highlighting the strain they place on the Swiss watchmaking industry.
Switzerland's watch industry is a critical economic sector, accounting for roughly 7% of the country’s total exports and about 17% of watch exports by value going to the United States—CHF4.3 billion (approximately $5.4 billion) in 2024 alone. The U.S. has remained the primary external market for Swiss watches, especially after a slowdown in Chinese demand starting in 2022. Breitling and other Swiss watchmakers have faced a dramatic tariff escalation from previous low rates up to a punishing 39%, compared to 15% tariffs on the European Union and 10% on the UK.
Kern stated confidence in temporary resolution prospects or partial tariff mitigation through ongoing governmental negotiations. However, he acknowledged the need for contingency strategies should the tariffs persist. Industry expert Oliver Müller emphasized the unpredictability of such policies under President Trump, whose unilateral tariff decisions challenge traditional diplomatic redress. Unlike strategic Swiss export sectors such as pharmaceuticals and gold, luxury watches are classified as discretionary consumer goods and thereby vulnerable to these populist protectionist measures.
Industry reactions vary: while some companies, including Swatch Group, report sustained growth and robust trading in U.S. markets despite the tariff shock, no widespread price increases have been implemented since the higher tariffs took effect in August. Analysts attribute this to stockpiling prior to tariff enforcement and the extended inventory buffers maintained in the U.S., which now amount to several months' worth at elevated levels. This cushion allows Swiss brands to absorb short-term tariff-related costs without immediate price hikes, preserving market competitiveness for the moment.
Swiss watchmakers are also exploring strategic adaptations. Some consider routing American exports through the European Union to benefit from the lower 15% tariff, leveraging cross-border manufacturing group structures that include entities in France and Germany. Others contemplate shifting parts of production abroad, including France, where "Made in France" rules are less stringent than "Swiss Made." Yet, relocating production to the U.S. is impractical due to the highly specialized skills required in Swiss watch manufacturing, which cannot be easily replicated domestically.
The economic ramifications extend beyond direct tariffs. As luxury products become more expensive in the U.S. market, consumer demand could erode over time, potentially diverting affluent American buyers to alternative markets or duty-free channels. This scenario threatens U.S.-based retailers and the broader Swiss watch export ecosystem. Nick Hayek, CEO of the Swatch Group, mentioned the risks of escalating tariffs prompting such consumption shifts, and controversially suggested taxing gold exports—a core component for luxury watches—to exert reciprocal pressure.
Politically, these tariffs on Switzerland—ranked among the top five countries facing the highest U.S. tariffs, between nations like Myanmar and Iraq—are straining bilateral trade relations. They pressure Switzerland to consider forging closer economic integration with the European Union, diverging from its traditional neutrality and non-membership stance. Concurrently, legal challenges against some tariff measures proceed through the U.S. judicial system, with courts already questioning tariff legality, though provisional enforcement remains in place pending Supreme Court review.
Looking forward, the Swiss watch industry faces a complex horizon. While the immediate hormonal market shock appears moderated by inventory strategies and no swift price adjustments, prolonged tariff burdens risk eroding Swiss brands' competitive edges and profit margins in the critical U.S. market. Given the Swiss luxury sector's global reputation and intricate artisanal production requirements, any sustained trade frictions could incentivize diversification of markets, recalibration of supply chains, and increased diplomatic advocacy.
Overall, the 39% U.S. tariffs represent a acute challenge for Swiss luxury watchmakers, epitomized by Breitling's CEO’s blunt assessment. The scenario embodies broader themes in global trade—where geopolitical shifts, nationalist policies, and economic nationalism disrupt established supply chains and consumer markets. The industry’s adaptive strategies and political negotiations in the coming months will be pivotal in shaping Switzerland’s continued prominence in the luxury watch segment internationally.
According to the detailed reporting by SWI swissinfo.ch and the CNBC interview with Georges Kern, the situation is fluid but fraught with challenges, underlining the urgent need for trade diplomacy coupled with innovative business resilience strategies in Switzerland's watchmaking sector throughout 2025 and beyond.
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