Editor’s Note
This article discusses a recent U.S. Supreme Court ruling that declared certain emergency trade tariffs illegal, a decision with potential global economic ramifications and specific relief for the international watch industry.
The U.S. Supreme Court has ruled that emergency trade tariffs imposed by former President Trump are illegal. This ruling, which has significant implications for the global economy, could provide relief for the watch industry, which has been hit hard by tariffs on imports from countries like Switzerland, Japan, and Germany. In a 6-3 decision, the Court found that the President’s application of a 1977 law, enacted for national emergencies, to impose import tariffs on global trading partners constituted an abuse of power.
However, in response to Friday’s Supreme Court ruling, the former U.S. President declared there were legal loopholes to maintain existing tariffs and indicated an intention to impose an additional 10% global tariff using a different trade law. He stated he would impose new tariffs without cooperating with the U.S. Congress. It remains unclear how U.S. courts will interpret this move.
Friday’s Supreme Court decision could bring substantial benefits to importers who have been paying tariffs on watches exported to the U.S. For Swiss-made watches, tariff rates ranged from 10% to as high as 39%. According to The New York Times, the federal government has collected over $200 billion in tariffs since the beginning of 2024. Importers handling watches from Switzerland, Japan, and Germany are believed to have paid millions, and if the ruling stands, they will seek refunds from the federal government. This ruling is also likely welcome news for Swiss watchmakers, who have faced significant cost pressures from a strong Swiss franc and soaring gold prices, in addition to a 15% tariff imposed on Swiss products imported into the U.S. under a recent bilateral trade agreement. After this tariff was imposed, nearly all top brands in the industry raised their prices.
Frank Müller, CEO of Germany-based consulting firm The Bridge to Luxury and former member of the Swatch Group AG management board, said the ruling was a welcome surprise. In an interview at the Inhorgenta jewelry and watch fair in Munich, Germany, he warned that the decision to invalidate U.S. tariffs would bring further short-term uncertainty to the industry.
Müller stated that concerns would arise from manufacturers and exporters regarding the final tariff rates they would face, how logistics and shipping routes would be affected in the interim, and ultimately how and when refunds would be implemented.
Executives from Rolex, Richemont, and Partners Group, owner of Breitling, met with former President Trump last year to discuss trade relations between Switzerland and the U.S.
In a dissenting opinion, Supreme Court Justice Brett Kavanaugh stated:
Justice Kavanaugh noted that the process was likely to be “chaotic.” The written dissent also suggested that trade agreements signed by the Trump administration with various trading partners, including Switzerland, were now in doubt.
Perhaps anticipating the Court’s invalidation of the tariffs, the former President emphasized in a recent social media post that the tariffs had increased government revenue.
Business and legal experts, following the Supreme Court’s decision that Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) to impose import levies exceeded his authority, had anticipated that the Trump administration would attempt to reimpose tariffs using different policies or regulations under U.S. trade law.
In response to U.S.-imposed tariffs on Swiss imports, Swiss watchmakers raised prices in 2025. From Rolex to Audemars Piguet and Patek Philippe, each brand implemented price increases to partially offset the tariffs. Patek, which raised U.S. prices by 15% last year in response to tariffs, recently acknowledged an approximately 8.5% price reduction at U.S. retailers following the reduction of tariffs on Swiss products from 39% to 15%. However, Patek buyers in other parts of the world are facing a 4% price increase.
In Friday’s trading, share prices of luxury goods manufacturers, including watchmakers, rose, with LVMH, Richemont, and Swatch Group gaining. However, the gains were modest as investors viewed the Supreme Court decision as unlikely to be the final word on Trump’s tariff policies. Broader market indices, including the S&P 500 and Nasdaq, showed little reaction as investors adopted a wait-and-see stance regarding the Court’s ruling and the Trump administration’s next move.
European Union (EU) authorities stated they would review the ruling before announcing any changes to trade policy, and UK government officials issued a similar statement, saying they were awaiting further details on the trade ruling.