Swatch Group’s CEO Nick Hayek has said he is not concerned about a new tariff rate of 39% for watches entering the United States because consumers tend to buy sooner if they expect price rises in the future.
The business leader called the editorial desk of Switzerland’s Le Temps on Tuesday this week to attack the Swiss government’s handling of trade negotiations, but reassure the market that Swatch Group is confident it will ride-out the turbulence and might even increase sales in the United States
The Americas account for 18% of Swatch Group’s global sales compared to 25% for LVMH and 22% for Richemont.
Mr Hayek’s optimism may be based on his assumption that US President Trump wants to reach an agreement and says he is confident that the 39% duty will not remain in place, even if it is imposed this week.
However, on the day Swiss President Karin Keller-Sutter flew to Washington for last ditch talks to prevent the tariff increase from 10% to 39% — only to return a day later empty-handed — Mr Hayek told Le Temps that the failed negotiations have exposed a “crisis of leadership” in Switzerland.
While arguing that headline tariffs on goods should be set at the same 15% level as the European Union, he says the luxury watch industry in the United States could actually benefit from the threat of future price rises.
“If consumers are afraid that prices will rise month by month, they will decide to buy faster. That is what we observe every time,” he told Le Temps.
“We achieved a record month in the US in April because prices would have changed from the first of May,” Mr Hayek revealed. “The following month, Americans continued to buy at full throttle and consumption remained strong in June,” he added.
A spike in sales ahead of price rises on May 1 was recorded by Luxury Watch Barometer, which curates point of sale data from over 2,500 luxury watch stores across the United States and saw a record rise of 35.6% in the Luxury price segment in April.
Luxury covers watches priced at $5,000 to $10,000 but does not include any data on Rolex transactions.
The same sales tracker saw an upturn of almost 17%, year-on-year, in May.
Assuming the 39% tariff rate on Swiss watch exports to the United States is imposed overnight, it will not necessarily trigger an immediate rise in prices.
Swiss watchmakers have been shifting stock into the United States in anticipation of tariff hikes.
For the four months from January to April, Swiss watch exports to the United States totalled CHF 1.39 billion in 2024. This year, that figure has jumped to CHF 2 billion.
From May to June this year, there was a slight drop in exports to the US worth CHF 138 million less to the Swiss, but that still left stock with a wholesale value of around CHF 600 million — around two months’ worth of inventory — in the country that had been charged at the pre-April tariff rate or with the additional 10% since.
And this is before another expected surge in exports to the USA this week to beat the Friday deadline.