CNBC’s Robert Frank reports on looming tariffs that could upend Swiss watch sales in the U.S, the Swiss government, and more.

The Swiss watch industry is facing uncertainty following the announcement of a proposed 39% U.S. tariff on Swiss watches. The United States is the largest market for Swiss watches, accounting for over $5 billion in sales. Industry analysts warn that such a tariff could severely disrupt sales, particularly as Swiss brands have become more dependent on the U.S. due to declining sales in China. 

While top luxury brands like Rolex and Patek Philippe may be less affected due to high demand and limited supply, the broader industry is concerned about the impact on retail prices and overall sales. The secondary market for pre-owned watches, which has seen significant growth, could benefit from the tariff. The Swiss government is actively seeking a resolution, with negotiations ongoing to avoid the tariff's implementation.

How Trump’s tariffs could impact the Swiss watch industry

Robert Frank has the details on this. So, Dish, Robert, what is it? Well, Becky, it's the Swiss watch industry. They were in a panic over the weekend. That's because the U.S. is by far their largest market in the world, totaling over $5 billion in sales last year. A 39% tariff that would be scheduled to take effect Thursday, that would virtually shut down sales. An analyst at Vontobo saying, quote, "'It would be devastating for numerous brands in Switzerland.'" Now, those brands are more dependent than ever on the U.S., as sales in China has fallen. Now, shares of retailer watches of Switzerland, they fell in the morning, now came back after reports of a potential deal. Richemont, whose watch brands include Cartier, IWC, and Vacheron, also quite volatile today. Now, the top status brands, so that's Rolex, Audemars Piguet, Patek Philippe, they would be less affected since they're already sold out for years. It's hard to get one of those watches. The tariff is on the import value, so that's about a 12 to 14% increase in the actual retail price. So, the price of a Rolex Submariner would go from about 9,500 to 10,600. Now, one positive, the pre-owned market is poised to take advantage, and that's because demand for pre-owned watches has been rising faster than new watches. Sales in the secondary market increased 30% this year. They now represent a third of all watch sales. So, that could be a silver lining here. That secondary market could see an increase after a lot of months of decline because there's been a lot of supply in that secondary market, Becky. So, the Swiss watchmakers are up in arms about this. What about the Swiss government? How big of an export value is that for them? Where does it kind of rank and what they'd be willing to do if there is going to be a deal reached? Yeah, the Swiss government also in a pact today. A lot of recriminations and blame. Who's to blame for this? By far the highest in Europe. They do run a large trade surplus with the U.S. That's because largely of gold. They do most of the gold refining that gets shipped to the U.S. as well as pharmaceuticals. So, watches are not the main culprit here, but they are a big lobbying group among many that is telling the Swiss government, do what you got to do to get us a deal. And it sounds like they're working toward that. We could get an announcement tomorrow or certainly this week. Swiss chocolate makers too. I bet they're not happy about this. And neither are us chocolate eaters. Okay, Robert, thank you. Great to see you.

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