Swiss Watch Exports to the U.S. Plummeted 56% in September

Swiss watch exports to the U.S. plummeted 55.6% in September to 157.7 million Swiss francs, marking the second consecutive monthly decline primarily due to a 39% U.S. tariff. This significant drop caused the U.S. to fall to third among export markets, with the U.K. now leading, and prevented overall industry growth, which would have otherwise seen a 7.8% increase. The tariff is forcing watchmakers and retailers to adapt, with experts speculating that brands may temporarily exit the American market if the levy persists, signaling substantial disruption for the luxury timepiece sector.

Analysis

Swiss watch exports to the U.S. plummeted 55.6% in September to 157.7 million Swiss francs, marking the second consecutive monthly decline. This significant contraction is directly attributed to the 39% U.S. tariff imposed in August, which has severely disrupted trade flows. The U.S. has consequently fallen from its position as the industry's largest market to third, now trailing the U.K. and Japan.

The substantial U.S. decline prevented overall industry growth, with total exports falling 3.1% year-over-year to 2 billion francs; without the U.S. impact, exports would have grown 7.8%. Conversely, other key markets like China and Hong Kong demonstrated robust growth, jumping 17.8% and 20.6% respectively. The U.K. emerged as the new top market, with exports increasing 15.2% to 173.3 million francs.

Steel watches experienced the steepest decline, with value down 3.8% and volume down 6.1%, while luxury pieces valued over $3,800 also fell 7.6%. Only watches in the 500-3,000 franc range saw export growth, and precious metal watches saw a minor 1.5% value increase, likely due to high gold and silver prices, but not volume. Experts anticipate that if the 39% tariff persists, Swiss watch brands may consider a temporary hiatus from the American market, indicating sustained disruption.

Key Decisions for Investors

• Investors should closely monitor developments regarding the 39% U.S. tariff on Swiss watches, as its persistence could lead to brands exiting the American market, impacting long-term revenue streams.
• Consider re-evaluating exposure to companies heavily reliant on the U.S. market for Swiss watch sales, and potentially shift focus towards regions demonstrating strong growth like the U.K., China, and Hong Kong.
• Analyze the resilience of different product segments, noting that mid-range watches (500-3,000 CHF) and precious metal components (due to commodity prices) show relative strength compared to declining steel and high-luxury segments.