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    Chocolate, skincare and timepieces: What 39% tariffs on Swiss goods mean for U.S. consumers

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    Switzerland is facing potential U.S. tariffs of 39% if a deal is not struck by Thursday.
    Consumers will mostly be familiar with the Alpine country’s high-end products, from Rolex watches to premium beauty products.
    Chocolate and coffee are among the other products likely to see price hikes.

    Premium collection of dark, milk and white chocolates.
    Anna Kurzaeva | Moment | Getty Images

    U.S. buyers of Swiss products, from luxury watches and skincare to artisan chocolates, could soon face sharp price rises if negotiators are unable to strike a deal to avert 39% tariffs due to come into effect on Thursday.
    The announcement last week that Switzerland faces one of the highest U.S. tariff rates in the world stunned many politicians, analysts and businesses, who had thought the country was close to negotiating a deal similar to those of the European Union and U.K., which got baseline rates of 15% and 10% respectively.

    The U.S. has a hefty trade deficit with Switzerland, totaling $38.3 billion in 2024. The Swiss government points out that the gap is in part because of the latter’s status as the world’s biggest center of gold refining, with huge quantities of the precious metal passing through the country for processing before it is sent around the world. Both gold and silver were exempted from the White House’s “reciprocal tariff” policy launched in April.
    The U.S. is also a major importer of Swiss pharmaceuticals, an industry that has been mired in confusion over the tariff rates it will face, and medical devices. Pharma products are currently exempt from the 39% levies, though sector-specific tariffs may yet come under the U.S.’s separate Section 232 investigation.
    But consumers will mostly be familiar with the Alpine country’s high-end products, from Rolex watches to premium skincare and beauty products. Sales could be rocked if the 39% tariffs remain in place for an extended period — something Swiss negotiators are currently scrambling to avoid, as economists warn of a massive hit to growth, jobs and stocks.

    Watches

    The U.S. was the biggest overseas market for Swiss watches in 2024, with exports totaling 4.37 billion Swiss francs ($5.4 billion), according to the Federation of the Swiss Watch Industry.
    To qualify as Swiss-made, at least 60% of a watch’s production cost must be Swiss-based, while its technical development must be conducted in the country.

    “Swiss watches have long been a cornerstone of the U.S. market, and a 39% tariff would be a real shake-up,” Paul Altieri, founder and CEO of online resale platform Bob’s Watches, told CNBC.
    “Suddenly, every import would carry a hefty extra cost, and dealers would face tough choices — absorb the tariff, eat into margins, or pass it on to customers. You’d likely see longer lead times as brands and retailers realign logistics, and higher sticker prices across the board.” The retail price of a Rolex Submariner could jump from $10,000 to nearly $14,000, he noted.
    For Swiss watch businesses, a 39% tariff would be “devastating,” Jean-Philippe Bertschy, head of Swiss equity research at Vontobel, told CNBC’s “Squawk Box Europe” on Tuesday.

    “They increased the prices already in spring by an average of 5 to 10%, I think another hit will be quite difficult for the U.S. consumer for sure, especially for the entry into the mid-segment level.” In a research note, Vontobel flagged Swatch as vulnerable to a tariff hit, with shares falling 2.3% on Monday.
    “For the luxury watches, for the brands like Rolex, Patek Philippe and Audemars Piguet, you have some long waiting lists. So I think it’s going to be more comfortable for these companies to increase the prices,” Bertschy continued.
    “You have very limited measures to take. You can, of course, increase efficiencies and to try to do some other measures to counter U.S. tariffs, but overall, very challenging for the industry.”

    Coffee

    Consumer goods giant Nestlé is one of Switzerland’s biggest firms. The company says that it faces a minimal direct impact from tariffs because it produces more than 90% of what it sells in the U.S. locally.
    That’s generally the case for consumer staples such as instant coffee or bottled water which are high-volume, low-ticket items, James Edwardes Jones, managing director of consumer research at RBC Capital Markets, told CNBC’s “Squawk Box Europe.”
    Its popular Nespresso coffee brand, known for at-home coffee machines and capsule pods, could, however, be among those goods exposed to higher rates and therefore price hikes.
    “In Nestle’s case specifically, Nespresso is all manufactured in Switzerland and then exported around the world, so it seems likely that will be caught in a small way,” Edwardes Jones added.
    Nestle did not immediately respond to CNBC’s request for comment on the impact of Swiss levies. The company does not specify the level of its U.S. sales for Nespresso, but its half-year results showed North America grew at a “strong double-digit rate.”

    Skincare

    Switzerland’s world-renowned beauty and skincare products could also be subject to price hikes as brands not included in a pharmaceutical tariff exemption look to offset higher import costs.
    That could be most notable for companies that pride themselves on Swiss production, such as caviar-based anti-aging skincare brand La Prairie, spa supplier Valmont and nail care business Mavala, none of which responded to CNBC’s request for comment.
    “While Swiss firms can generally weather a 10-15% tariff without major margin erosion or demand loss, 39% sets the bar much higher,” Lombard Odier said in a Monday note.
    Lausanne-headquartered Galderma, whose products include injectable aesthetics and Cetaphil facewash, meanwhile, said that it does not produce in Switzerland and is currently largely excluded from global tariffs under pharma exemptions.
    However, its large production capacity in the European Union, U.K. and Canada could be subject to higher levies, potentially hitting consumer costs.

    Luxury

    Higher import duties are also seen pushing up the price of luxury goods, including Richemont-owned high-end jewelry brands Cartier and Van Cleef & Arpels.
    BofA Securities said in a note Tuesday that 7% of Richemont’s input costs would be exposed to higher Swiss tariffs, likely adding to higher consumer prices. “Price increases would be the most obvious way to mitigate the headwind,” the analysts wrote.

    Cartier, a unit of Cie. Richemont SA, luxury watches sit on display in a store front.
    Bloomberg | Getty Images

    Richemont did not respond to CNBC’s request for comment on the 39% rate, however it flagged in its first-quarter earnings that tariffs could lead to “increased prices,” which could impact consumer demand.
    Lombard Odier noted that a “small fraction” of luxury exports could see demand for their products increase with price, but broadly price hikes were set to hurt consumer demand.

    Chocolate

    Roger Wehrli, director of Swiss chocolatiers’ manufacturing association Chocosuisse, said a 39% tariff rate would be passed on via prices and cause a steep loss of U.S. business for many of the group’s members. The recent appreciation of the Swiss franc against the U.S. dollar, which causes imports to become more expensive, means the effective price increase would be closer to 55%, he noted.
    The main impact will be on small- and medium-sized businesses that are unable to utilize U.S. production sites like big multinationals can, Wehrli said. Industry juggernauts Lindt & Sprüngli and Barry Callebaut already have factories stateside, while smaller Chocosuisse members such as Camille Bloch and Läderach produce exclusively in Switzerland.
    “There’s another specific problem with producing in the United States,” Wehrli continued.
    “If you want to label your chocolate as Swiss then it has to be produced in Switzerland. That’s a quality sign in the international market, so you will more or less lose your customers if it’s not Swiss origin anymore,” Wehrli told CNBC.
    These rules of origin forced Toblerone, owned by U.S. group Mondelez International, to change its packaging in 2023 to refer to itself as being “established in Switzerland” rather than “Swiss chocolate” after it moved some of its production from the Swiss capital Bern to Slovakia. CNBC has contacted Mondelez for comment on the impact of tariffs on Toblerone in the U.S. More

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    How training the brain could boost economic growth

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    Trump rules out Bessent for Federal Reserve chair

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    Trump says Treasury Secretary Bessent ‘does not want’ to be Fed chair, but 4 others in running

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    President Donald Trump told CNBC that he has narrowed the field of potential Fed chairs to four candidates, a list that does not include Treasury Secretary Scott Bessent, who has taken himself out of contention.
    Among the likely candidates remaining are former Governor Kevin Warsh and Kevin Hassett, the National Economic Council director and a key Trump advisor. Both have advocated for lower rates.

    President Donald Trump told CNBC on Tuesday that he has narrowed the field of potential future Federal Reserve chairs to four candidates, a list that does not include Treasury Secretary Scott Bessent.
    While the president did not disclose who is in contention, he revealed that Bessent, previously considered a leading candidate, has taken himself out of contention.

    “Well, I love Scott, but he wants to stay where he is,” Trump said during a “Squawk Box” interview. “I asked him just last night, ‘Is this something you want?’ [Bessent said], ‘Nope, I want to stay where I am. He actually said, ‘I want to work with you.’ It’s such an honor. I said, ‘That’s very nice. I appreciate that.'”
    The news follows Fed Governor Adriana Kugler’s surprise announcement Friday that she is resigning effective this Friday. The move allows Trump to install another of his appointees to the Fed Board of Governors at a time when the White House is aggressively pushing the central bank to lower interest rates.
    Among the likely candidates remaining are former Governor Kevin Warsh and Kevin Hassett, the National Economic Council director and a key Trump advisor. Both have advocated for lower rates. Fed Governor Christopher Waller also is thought to be in the running.
    “Both Kevins are very good, and there are other people that are very good, too,” Trump said, adding that Kugler’s resignation “was a pleasant surprise.”
    Current Chair Jerome Powell’s term ends in May 2026. He has been a frequent target of Trump’s criticism, and there has been speculation that the president would name a “shadow chair” who could help undermine Powell until his term expires. Trump did not commit to taking that approach but conceded that it is “a possibility.”

    Trump nominated Powell for the Fed job in 2017, during his first term as president. The Senate then confirmed Powell the following February. Trump alleged Tuesday that Powell told him, “Sir, I’ll keep interest rates so low. I’m a low interest rate person.”
    The Fed last week voted to hold its benchmark interest rate steady in a range between 4.25%-4.5%. Markets expect the Fed to approve its next cut in September. The central bank lowered its policy rate a full percentage point from September through December 2024, moves that Trump has said were politically motivated to help Democratic presidential nominee Kamala Harris.
    Click here to watch the CNBC TV livestream. More

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    Russia weighs into U.S.-India tariff spat, saying New Delhi can choose its own trade partners

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    Russia on Tuesday commented on the growing dispute between the U.S. and India over purchases of Russian oil.
    Trump’s tariff threats were “attempts to force countries to stop trade relations with Russia,” the Kremlin said.
    India and Russia’s trade relationship has grown since the invasion of Ukraine in 2022.

    Russia’s President Vladimir Putin bids farewell to India’s Prime Minister Narendra Modi following their meeting at the Kremlin in Moscow, Russia July 9, 2024. 
    Gavriil Grigorov | Via Reuters

    Russia on Tuesday weighed into the growing spat between India and the U.S., with the Kremlin saying New Delhi is free to choose its own trading partners.
    Washington and India’s leadership are at loggerheads over imports of Russian oil, with U.S. President Donald Trump threatening New Delhi with much steeper tariffs if it continues to purchase the commodity from Russia.

    The Kremlin, an important trading partner of India’s and one which had stayed silent as the spat erupted in the last few days, commented Tuesday that Trump’s tariff threats are “attempts to force countries to stop trade relations with Russia.”
    “We do not consider such statements to be legitimate,” Kremlin Press Secretary Dmitry Peskov continued, speaking to reporters Tuesday.
    “We believe that sovereign countries should have, and have the right to choose their own trade partners, partners in trade and economic cooperation. And to choose those trade and economic cooperation regimes that are in the interests of a particular country.”
    The dispute between Trump and New Delhi is being closely watched by investors after Trump threatened on Monday that he would be “substantially raising” the tariffs on India, although he did not specify the level of the higher tariffs. The president had threatened a 25% duty on Indian exports, as well as an unspecified “penalty” last week.
    He also accused India of buying discounted Russian oil and “selling it on the Open Market for big profits.”

    On Tuesday, Trump told CNBC’s “Squawk Box” that the tariff threshold could be hiked above 25% in the next 24 hours.
    “India has not been a good trading partner … so we settled on 25%, but I think I’m going to raise that very substantially over the next 24 hours, because they’re buying Russian oil, they’re fueling the war machine, and if they’re going to do that, I’m not going to be happy,” Trump said.

    India hit back at the U.S. later on Monday, accusing it and the European Union of hypocrisy.
    “It is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion [for them],” the foreign ministry said in a statement.
    Western countries have used sanctions and import restrictions as a way to stifle Moscow’s oil export-generated revenues that fund its war machine against Ukraine. However, some of Russia’s trading partners, particularly India and China, have continued their purchases of discounted Russian crude that their economies largely rely on.
    India and Russia’s trade relationship has grown since the invasion of Ukraine in 2022; Russia became India’s leading oil supplier after the war began, with imports increasing from just under 100,000 barrels per day before the invasion — 2.5% of total imports — to more than 1.8 million barrels per day in 2023 — 39% of overall imports, the U.S. Energy Information Administration said earlier this year.
    — CNBC’s Lim Hui Jie contributed reporting to this story. More