The Swatch Group AG, one of the major players in the Swiss watchmaking market, has opted to increase the prices of some watch models sold in the United States. This comes amid mounting pressure from the declining value of the US dollar and the increased tariffs imposed by the United States on Swiss goods.
Double Whammy: Shift in Currency Value and Increased Tariffs Spell Trouble
A Swatch Group spokesman confirmed the hike, giving “two main reasons” for the sharp price increase. The first one is the dramatic change in the exchange rate of the US and Swiss currencies. According to the representative, “the value of the dollar took a plunge by nearly eight percent over the last month,” making Swiss products more pricey. The second reason is the increased rate of tariffs charged by the United States on Swiss watches, which has grown from 3 percent to 10 percent.
Susceptible Luxury Brands: Omega, Blancpain, and Others
The Swatch Group’s catalog includes luxury watch brands of all tiers, from Omega, Breguet, and Blancpain to more budget-friendly Tissot and Swatch. Though the company’s spokesperson opted not to disclose which brands would be impacted, there is speculation that the upper-tier segments will be most affected. Insiders predict that the detailed craftsmen luxury brand Glashütte Original will be alongside Blancpain for the first price revisions. It is estimated that all models of Blancpain will see an approximate 10% increase, while Glashütte models will be subjected to a 7% increase.
A First Mover? Swatch Group’s Price Hike
By publicly issuing lowered prices as a response to the current global economic climate, Swatch Group becomes the first major player in the Swiss watchmaking industry to take such a bold move. This comes in tandem with the market’s reaction to US President Donald Trump’s trade policy, which has declared multiple tariffs on several trading nations, including Switzerland.
The Drop in the Dollar: Its Trade Policy Impact
The erosion of the US dollar’s value aligns with the economic disruption caused by Trump’s trade policies. The policies have created uncertainty, which has had a negative impact on the investor’s confidence in the US economy; the dollar’s demand has also plummeted.
The Increase in Gold Prices: Added Pressure
Alongside the Swiss watch industry’s trouble, the rampant increases in the prices of gold, one of the vital raw materials needed to produce watches, are getting out of hand. Investors are looking for options to invest their money in safe places during times of economic uncertainty, causing the price of gold to shoot up from $3,200 per ounce, an approximate 10 % increase over the past month. This increase further adds to the pressure taken by the watch manufacturers.
Industry Watch: The Last Shift From Other Competitors?
The Swatch Group’s decision to raise their prices sets the expectation for sales increases from some other players in the Swiss watch market, including other brands like Rolex and Richemont (Cartier and Vacheron Constantin), as well as LVMH (TAG Heuer and Bulgari). The watch industry will need to closely monitor the situation around Swatch Group to make sure that the change will create a ripple effect of price change in the luxury watch market.
