While Swiss watchmakers activate an unprecedented airlift of stock into the United States, the country’s leaders are said to be “regrouping” to come up with a final offer to avoid 39% tariffs that will be imposed from Thursday.
Swiss officials have been huddled in crisis meetings over the weekend, with little news emerging since the new tariff rate was announced in an Executive Order from the White House on August 1.
However, with just four days to go until time runs out to avoid the additional 39% tax, Rahul Sahgal, CEO of the Swiss-American Chamber of Commerce, says he is optimistic that a deal can still be reached.
“I strongly believe that we will manage to avoid having 39%,” he tells Swissinfo.
“I think the approach now is for us to regroup and consider what the best strategy is. And then we have to see whether we can manage to have something in place before August 7 that might bring us down from 39%. Otherwise, this executive order also leaves the door open to bringing the tariff down if something is negotiated at a later date,” he adds.
Anger is rising among Swiss business executives that the country could be blindsided at a time they were being reassured that a trade deal was close to being agreed.
Even Mr Sahgal, whose office is a bridge between American and Swiss business leaders, was shocked that President Trump appears to have overruled his own negotiators, which were recommending a deal proposed by the Bern government.
“Switzerland has negotiated very well and very thoughtfully with the top officials in the US administration over the last three months. And what we negotiated with them had their backing. In other words, the only open component was Donald Trump,” he suggests.
President Trump has been vocal in fighting to close a $40 billion trade deficit with Switzerland, although its biggest export sector, pharmaceuticals, is exempt from the proposed 39% tariff.
The value of Swiss watch exports to America reached a record $5.4 billion last year.
Most Swiss brands responded to April’s imposition of a 10% additional tariff by raising prices by 3-10%.
Rolex also cut the margin of its authorized dealers, but aimed to maintain the profit from each watch sold at the same dollar value because of the higher prices.
As a result, demand for Rolex was unaffected, according to retailers speaking with WatchPro since April.