Swiss Luxury Prices Set to Soar Amid Urgent 39% Tariff Threat
UPDATE: A staggering 39% tariff on Swiss exports, just announced by U.S. President Donald Trump, threatens to skyrocket prices for Swiss luxury goods, including watches, chocolate, and cheese, as early as next week. Industry leaders are warning that both Swiss companies and American consumers will feel the impact of this sudden trade policy shift.
The tariff, set to take effect on July 13, 2023, comes as part of Trump’s escalating trade agenda affecting 66 countries, including the European Union and Taiwan. Swiss officials are reeling from the news, with Swiss President Karin Keller-Sutter expressing shock over the steep increase, which was unexpected after previous negotiations appeared to yield a more favorable outcome.
“We will now analyze the situation and try to find a solution,” Keller-Sutter stated. “This will certainly damage the economy.” The U.S. trade deficit with Switzerland was reported at $38.5 billion last year, a significant increase of 56.9% from 2022, which many believe influenced the tariff decision.
The Federation of the Swiss Watch Industry highlighted that the tariff marks one of the highest export duties imposed, surpassed only by Laos, Myanmar, and Syria. Swiss watches, already luxury items often costing thousands of euros, are expected to become even more unaffordable, hitting consumers hard.
The 39% tariff is particularly frustrating for the watch industry, which recently eliminated all import tariffs on industrial goods. “There is no problem with reciprocity between Switzerland and the U.S.,” the federation noted, stressing that these tariffs threaten bilateral relations and could lead to significant losses in sales.
Meanwhile, the Swiss chocolate industry is bracing for impact as well. With 7% of chocolate production exported to the U.S., Roger Wehrli, CEO of the Association of Swiss Chocolate Manufacturers, warned that the combination of tariffs and exchange rate fluctuations could result in nearly a 50% increase in costs. “I expect that our industry will lose customers in the United States,” Wehrli stated, emphasizing the dire consequences for small and medium-sized Swiss chocolatiers.
“Even if prices for Swiss chocolate increase due to the very high tariffs, I think it’s worth it to buy Swiss chocolate,” Wehrli added. “It’s worth it to really eat it consciously and to really enjoy it instead of eating a lot.”
Furthermore, Swiss pharmaceutical giants like Roche and Novartis are also feeling the pressure. Roche is committed to ensuring patient access to medications despite potential tariff implications, while Novartis is currently reviewing Trump’s executive order. Roche has recently pledged $50 billion in investments in the U.S. over the next five years, creating thousands of jobs.
As the deadline approaches, the looming tariffs are expected to disrupt supply chains and raise prices for consumers across the board. The Swiss economy, known for its luxury exports, is bracing for a significant blow. The urgent response from Swiss leaders indicates a critical need for resolution, as the effects of this tariff will reverberate through the global economy.
What happens next? Stakeholders are watching closely as negotiations and potential retaliatory measures unfold in the coming days. Consumers are urged to prepare for potential price hikes on their favorite Swiss indulgences as the clock ticks down to the implementation of these tariffs.
