How will 39% of Swiss prices reach prices

American buyers of Swiss products, luxury watches and skin care with craft chocolates, could soon face net price increases if negotiators are unable to conclude an agreement to avoid 39% tariffs which should come into force on Thursday.

The announcement of last week that Switzerland faces one of the highest American tariff rates in the amazed world of many politicians, analysts and businesses, who thought that the country was about to negotiate an agreement similar to those of the European Union and the United Kingdom, which had 15% and 10% reference rates respectively.

The United States has a high trade deficit with Switzerland, totaling $ 38.3 billion in 2024. The Swiss government stresses that the gap is partly due to the status of the latter as the largest world center for gold refining, with enormous amounts of precious metal passing through the country for treatment before it is sent worldwide. Gold and silver were exempt from the “mutual price” policy of the White House launched in April.

The United States is also a large importer of Swiss pharmaceutical products, an industry that has been mired in confusion on the rate rates that it will face and medical devices. Pharmaceutical products are currently exempt from direct debits of 39%, although sectoral prices can still fall under the separate survey of the United States.

But consumers mainly know high -end products from Alpin country, from Rolex watches to high -end care and beauty products. Sales could be shaken if the 39% prices remain in place for an prolonged period – something that Swiss negotiators are currently rushing to avoid, while economists warn against a massive blow to growth, jobs and actions.

The United States was the largest market abroad for Swiss watches in 2024, with exports totaling 4.37 billion Swiss francs ($ 5.4 billion), according to the Federation of the Swiss surveillance industry.

To qualify as Swiss manufacture, at least 60% of the cost of production of a watch must be based on Switzerland, while its technical development must be carried out in the country.

“Swiss watches have long been an cornerstone of the American market, and a price of 39% would be a real upheaval,” CNBC Paul Altieri, founder and CEO of the Bob’s Watches online resale platform told CNBC.

“Suddenly, each import would carry an additional cost and the concessionaires will face difficult choices – would absorb the price, eat on the margins or transmit it to customers. You would probably see longer deadlines as brands and retailers realign logistics and higher stickers prices.” The retail price of a Submariner Rolex could go from $ 10,000 to almost $ 14,000, he noted.

For Swiss surveillance companies, a rate of 39% would be “devastating”, Jean-Philippe Bertschy, head of research in Swiss shares in Vontobel, said Tuesday “Squawk Box Europe” of CNBC.

“They have already increased prices in spring on average from 5 to 10%, I think that another blow will be quite difficult for the American consumer, in particular for the entry into the segment in mid-segment.” In a research note, Vontobel reported Swatch as vulnerable to a price stroke, the actions lowering 2.3% on Monday.

“For luxury watches, for brands like Rolex, Patek Philippe and Audemars Piguet, you have long waiting lists. I therefore think it will be more comfortable for these companies to increase prices,” continued Bertschy.

“You have very limited measures to take. You can, of course, increase efficiency and try to make other measures to counter American prices, but overall, very difficult for industry.”

Giant consumer goods Nestle is one of the largest companies in Switzerland. The company claims that it faces a minimum direct impact of prices because it produces more than 90% of what it sells in the United States locally.

This is generally the case for consumption staples such as instant coffee or bottled water which are low -volume and low -tick items, James Edwardes Jones, Consumer Director of Consumer Research at RBC Capital Markets, told CNBC “Squawk Box”.

His popular Nespresso coffee brand, known for coffee machines at home and capsule pods, could, however, be among these goods exposed at higher prices and therefore price increases.

“In the case of Nestlé in particular, Nespresso is entirely manufactured in Switzerland and then exported to the world, so it seems likely that it will be taken in a small manner,” added Edwardes Jones.

Nestlé did not immediately respond to the request for CNBC comments on the impact of Swiss samples. The company does not specify the level of its American sales for Nespresso, but its half -yearly results have shown that North America has increased at a “solid two -digit rate”.

Beauty products and world -renowned skin care in Switzerland could also be subject to price increases, because brands not included in a pharmaceutical price exemption seek to compensate for higher import costs.

This could be the most notable for companies that have been proud of Swiss production, such as the Caviar-based anti-aging skin care brand, the meadow, the SPA Valmont supplier and the Mavala nail care company, none of which has responded to CNBC’s comment.

“While Swiss companies can generally resist a price of 10 to 15% without a major margin erosion or loss of demand, 39% fixes the bar much higher,” said Lombard Odier in a note on Monday.

Lausanne whose foot Galdermawhose products include injectable aesthetics and washing the face of Cetaphil, on the other hand, have said that it does not produce in Switzerland and is currently widely excluded from world prices under pharmaceutical exemptions.

However, its great production capacity in the European Union, the United Kingdom and Canada could be subject to higher levies, which potentially consumer costs.

Higher import rights are also seen to increase the price of luxury products, especially Richemont– High -end jewelry brands Cartier and Van Cleef & Arpels.

Bofa Securities said in a post on Tuesday that 7% of Richemont’s entry costs are exposed to higher Swiss prices, which has probably increased higher consumer prices. “Price increases would be the most obvious way to mitigate the front wind,” the analysts wrote.

Richemont did not respond to the request for CNBC comments on the rate of 39%, but he reported in his first quarter income that prices could lead to “increased prices”, which could have an impact on consumer demand.

Lombard Odier noted that a “small fraction” of luxury exports could see the demand for their products increase with the price, but the prices increases should harm consumers’ demand.

Roger Wehrli, director of the Swiss Chocolatiers’ Manufacturing Association Choosuisse, said that a rate rate of 39% would be reflected in prices and would cause strong loss of the American company for many members of the group. The recent assessment of the Swiss franc against the US dollar, which means that imports become more expensive, which means that the actual increase in prices would be closer to 55%, he noted.

The main impact will be on small and medium -sized enterprises that cannot use American production sites as large multinationals can, Wehrli said. Industry mastodon Lindt and Sprüngli And Barry Callebaut Already have factories in the United States, while the smallest members of Chocosuisse such as Camille Bloch and Läderach produce exclusively in Switzerland.

“There is another specific problem with production in the United States,” said Wehrli.

“If you want to label your chocolate as Swiss, it must be produced in Switzerland. It is a sign of quality on the international market, so you will lose your customers more or less if it is no longer of Swiss origin,” Wehrli told CNBC.

These rules of origin forced toblerone, belonging to the American group Mondelez InternationalTo change its packaging in 2023 to qualify as “established in Switzerland” rather than “Swiss chocolate” after having moved part of its production from the Swiss capital Berne in Slovakia. CNBC contacted Mondelez to comment on the impact of prices on toblerone in the United States