The U.S.-Swiss Watch Tariff as a Test of Emergency Trade Power
In August 2025, under an executive order that amended “reciprocal” country rates issued in April, the United States implemented a 39% tariff on most Swiss imports, including luxury watches." [1, 2] The policy strikes at the heart of Switzerland’s luxury export profile: Rolex, Patek Philippe, Omega, and other marquee brands have since pushed U.S. retailers to reprice new inventory, cut orders, delay deliveries, and reweight assortments toward non-Swiss alternatives. [3] Switzerland has requested relief from Washington and is considering its next steps in Geneva, home to the World Trade Organization. [4]
The measure is unusual because of its legal basis: instead of proceeding through the trade-specific pathway Congress created for increasing border measures, the administration declared a national emergency under the National Emergencies Act and invoked the International Emergency Economic Powers Act (IEEPA). [5, 6] The latter provides the authority for the President to regulate or prohibit certain international economic transactions during a national emergency. [7] The April and July 2025 executive orders use those authorities to establish and then alter “reciprocal” tariffs by trading partner, with implementing details published in the Federal Register and Customs directional. [8, 9] This action does not rely on a Section 232 national-security finding regarding a product, a Section 301 finding of unfair practices, or a safeguard remedy for a sudden surge in imports. Nor does it rely on a trade act’s narrow balance-of-payments surcharge, which limits temporary across-the-board increases to 15%. [10, 11, 12]
This statutory context sets the table for the threshold question for courts in the U.S.: Did Congress authorize IEEPA to impose a country-wide ad valorem duty of 39% unrelated to the ordinary predicates and processes of trade remedies? The verbs used in IEEPA, namely to “regulate” and to “prohibit,” have long been interpreted broadly in the context of foreign-economic emergencies. [13] The Supreme Court sustained expansive executive actions in relation to the 1979 Tehran hostage crisis in Iran in Dames & Moore v. Regan, when IEEPA was read together with related statutes and a consistent practice of external relations. [14] However, under the Youngstown framework of Justice Robert H. Jackson, executive power is strongest when Congress has authorized the action, murkier when Congress is silent, and at its ‘lowest ebb’ when the President acts contrary to Congress’s will. [15] Those guideposts point in opposite directions here: IEEPA is expansive, but Part 1 of the trade code of Title 19 specifies the pathways to apply tariffs with built-in properties and criteria. Section 232 relates to national security, Section 301 refers to unfair trade, and Section 122 to capped surcharges. [16, 17, 18]
Proponents see the surcharge as reflecting speed, flexibility, and deference. Emergencies can combine economics and security in ways that traditional trade statutes do not neatly articulate. IEEPA is the statute Congress established for dynamic emergencies. [19] If regulating import transactions means making entry conditional on an additional fee, we can explain a partner-specific rate as a pricing prerequisite for entry, rather than a total revision of the tariff. [20] Deference to foreign relations is another theme: courts over the years have made a habit out of not interfering with presidential determinations about foreign affairs. This was shown when Congress delegated authority broadly and while negotiations might be in flux. [21] In this framework, Sections 232 and 301 are complementary measures, and IEEPA is invoked when the President determines there is an urgent systemic issue requiring immediate attention.
Skeptics question whether the measure matches the statutes Congress enacted and its structural limits. The Court has also recently demanded clear congressional authorization for actions with “economic and political significance," often referred to as the major-questions doctrine. In West Virginia v. EPA and Biden v. Nebraska, the Court required clear text before accepting sweeping programs under broadly written statutes. [22, 23] Analogously, invoking IEEPA to impose a country specific 39% tariff rather than using Section 232, Section 301, or Section 122 without a clear statement of approval from Congress may be perceived to encroach on Congress's tariff-setting authority. [24, 25, 26] Section 122’s ceiling of 15% for temporary flat increases is an especially potent indicator that Congress was considering and limiting broad across-the-board increases; jumping to 39% under an emergency statute must seem to be a sneaky variant of those limits. [27] In contrast to recent steel and aluminium cases that moved through Section 232 after Commerce findings, this measure is based on IEEPA rather than focusing on trade-specific pathways. [28]
International obligations add a second layer to the issue. The Most-Favoured-Nation Clause of the General Agreement on Tariffs and Trade (GATT) 1994 generally prohibits giving one member’s “like products” worse treatment than another member’s. [29] WTO also has several exceptions, including anti-dumping duties, countervailing duties, and safeguards. However, there are no investigations and injury findings required, and global application requirements (for safeguards) rather than country discrimination. A national security exception of the GATT Article XXI exists but does not come with an unlimited or automatic immunity: WTO panels in Russia—Measures Concerning Traffic in Transit (DS512) and United States—Origin Marking Requirement (DS597) imposed the national security only as reviewable in good faith but clearly in relation to a “war or other emergency in international relations.” [30, 31] A 39% tariff on Switzerland raises eyebrows unless either the United States has a valid justification for country discrimination not captured in the classic remedies, or any asserted emergency meaningfully fits Article XXI as panels have understood it. [32] A negative finding could lead to retaliation if the United States did not bring the measure into compliance with WTO rules.
The commercial ramifications are more immediate, however. Higher landed costs on new Swiss watches require authorized dealers to make more tradeoffs among higher manufacturer's suggested retail prices (MSRPs), lower margins, and diminished allocations. [33] Some will not take on the price risk, but will reallocate risk by presenting lower cost alternatives and non-Swiss brands in order to keep accessible price points. For consumers anchored on a price budget, they may displace demand to pre-owned platforms. [34] Import values are changing, and spillover effects are starting to show in adjacent Swiss segments (precision instruments and specialty foods). [35] In the mid-run, quarterly reporting and customs data will demonstrate how much the 39% is passed through in price relative to retained and absorbed margins, and whether brands sequentially change the regions they shipped to until U.S. conditions improve. [36]
Process will matter if and when cases are filed. Claims are likely to get filed in the Court of International Trade using residual jurisdiction over challenges to trade actions to establish exigent relief. [37] Claimants will argue that the orders are ultra vires under IEEPA and the National Emergencies Act, inconsistent with Title 19’s design and that there are less disruptive alternatives (e.g., Section 232, Section 301, safeguards, and a time-bound Section 122 surcharge). [38, 39, 40, 41, 42] Expect briefings to deal with these three areas: IEEPA’s text and history, Youngstown’s three-part scheme and its focus on Congress's expressed will, and the modern insistence on clear statements for economically significant programs. [43, 44, 45] The U.S. government will maintain its defense, focusing on IEEPA’s breadth and Dames & Moore-style deference in foreign-economic crises, and the familiar argument that Congress knows how to limit emergency tools and has not done so for IEEPA in this context. [46]
Outcomes may vary between narrow and broad interpretations of the IEEPA. A narrower ruling could retain the emergency flexibility but require a closer textual fit, like requiring a better-developed presidential finding to sustain nationwide ad valorem conditions, or limiting what import “transactions” can be priced under the IEEPA without either a Section 232 or a Section 301 predicate. [47, 48, 49, 50, 51, 52] A broader ruling could hold that overhauling tariff rates by country is the kind of significant economic move that belongs to Congress, unless Congress explicitly delegates authority, reverting administrations back to the trade laws. [53, 54] Courts could also use their foreign-affairs based discretion to defer, particularly with active negotiations, where the administrative record might show continued calibration through Federal Register updates or bilateral documents. [55, 56, 57, 58] Wherever the ruling is settled, it may very well decide the boundary between emergency economics and trade law, and indicate where agencies and courts land in deciding speed against statutory specificity in the next emergency. [59]
For fashion and luxury audiences, the stakes are concrete. If the 39% tariff continues, MSRPs on new Swiss watches will have to increase, U.S allocations will likely become tighter, and boutiques may prioritize other markets. [60, 61] If courts roll the policy back, it will only slow how quickly any administration can change the competitive landscape for luxury goods via emergency orders, reinforcing that large trade moves should run through states Congress wrote and internationally, through the WTO pathways Switzerland is already weighing. Either way, the litigation will impact prices, availability, and planning cycles in the global market far beyond watches.
Sources
Exec. Order No. 14,257, Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Trade Deficits, 90 Fed. Reg. 15,041 (Apr. 7, 2025).
Exec. Order No. 14,326, Further Modifying the Reciprocal Tariff Rates, 90 Fed. Reg. 37,963 (Aug. 6, 2025).
Ruehl, Mercedes, and Aime Williams. “Switzerland in fresh push to woo Donald Trump on tariffs.” Financial Times, September 22, 2025. https://www.ft.com/content/a470c79c-9d38-453e-b3d1-3a743d7d3c9c.
Ibid.
National Emergencies Act, 50 U.S.C. §§ 1601–1651.
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1708.
IEEPA, 50 U.S.C. § 1702(a)(1) (authority to “investigate, regulate, direct and compel” foreign economic transactions).
Exec. Order No. 14,257, Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Trade Deficits, 90 Fed. Reg. 15,041 (Apr. 7, 2025).
Exec. Order No. 14,326, Further Modifying the Reciprocal Tariff Rates, 90 Fed. Reg. 37,963 (Aug. 6, 2025).
Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
Trade Act of 1974 § 301, 19 U.S.C. § 2411.
Trade Act of 1974 § 122, 19 U.S.C. § 2132.
IEEPA, 50 U.S.C. § 1702(a)(1) (authority to “investigate, regulate, direct and compel” foreign economic transactions).
Dames & Moore v. Regan, 453 U.S. 654, 672–74, 678–79 (1981).
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635–38 (1952) (Robert H. Jackson, J., concurring).
Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
Trade Act of 1974 § 301, 19 U.S.C. § 2411.
Trade Act of 1974 § 122, 19 U.S.C. § 2132.
Dames & Moore v. Regan, 453 U.S. 654, 672–74, 678–79 (1981).
Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 559–71 (1976).
United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 320–22 (1936); Regan v. Wald, 468 U.S. 222, 242–43 (1984).
West Virginia v. EPA, 597 U.S. ___ (2022). West Virginia v. EPA, No. 20-1530, slip op. at 2 (U.S. June 30, 2022).
Biden v. Nebraska, 600 U.S. ___ (2023). Biden v. Nebraska, No. 22-506, slip op. (U.S. June 30, 2023).
Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
Trade Act of 1974 § 301, 19 U.S.C. § 2411.
Trade Act of 1974 § 122, 19 U.S.C. § 2132.
Ibid.
American Institute for International Steel v. United States, 806 F. App’x 982 (Fed. Cir. 2020), cert. denied, 141 S. Ct. 133 (2020); Transpacific Steel LLC v. United States, 4 F.4th 1306 (Fed. Cir. 2021).
General Agreement on Tariffs and Trade 1994, art. I, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187.
Panel Report, Russia—Measures Concerning Traffic in Transit (DS512), WT/DS512/R (circulated Apr. 5, 2019).
Panel Report, United States—Origin Marking Requirement (DS597), WT/DS597/R (circulated Dec. 21, 2022).
GATT 1994, art. XXI (Security Exception).
Corder, Rob. “Patek Philippe hikes USA prices as Trump’s tariffs bite.” WatchPro, September 15, 2025. https://www.watchpro.com/patek-philippe-hikes-usa-prices-as-trumps-tariffs-bite/.
Hart, Jordan. “A ‘seismic’ 39% tariff on Switzerland is rocking the watch world, and even pre-owned Rolexes could see price hikes.” Business Insider, August 2, 2025. https://www.businessinsider.com/swiss-watch-market-39-tariff-rate-prices-2025-8.
Revill, John and Olivia Le Poidevin. “Swiss stunned by US tariff hike, seek negotiated solution.” Reuters, August 1, 2025. https://www.reuters.com/world/europe/swiss-stunned-by-us-tariff-hike-seek-negotiated-solution-2025-08-01/.
Federation of the Swiss Watch Industry (FH). “Swiss Watchmaking in August 2025.” Monthly statistics bulletin, August 2025. https://www.fhs.swiss/scripts/getstat.php?file=comm_250808_a.pdf.
28 U.S.C. § 1581(i) (Court of International Trade residual jurisdiction).
National Emergencies Act, 50 U.S.C. §§ 1601–1651.
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1708.
Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
Trade Act of 1974 § 301, 19 U.S.C. § 2411.
Trade Act of 1974 § 122, 19 U.S.C. § 2132.
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635–38 (1952) (Robert H. Jackson, J., concurring).
West Virginia v. EPA, 597 U.S. ___ (2022). West Virginia v. EPA, No. 20-1530, slip op. at 2 (U.S. June 30, 2022).
Biden v. Nebraska, 600 U.S. ___ (2023). Biden v. Nebraska, No. 22-506, slip op. (U.S. June 30, 2023).
Dames & Moore v. Regan, 453 U.S. 654, 672–74, 678–79 (1981).
National Emergencies Act, 50 U.S.C. §§ 1601–1651.
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1708.
IEEPA, 50 U.S.C. § 1702(a)(1) (authority to “investigate, regulate, direct and compel” foreign economic transactions).
Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
Trade Act of 1974 § 301, 19 U.S.C. § 2411.
Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 559–71 (1976).
West Virginia v. EPA, 597 U.S. ___ (2022). West Virginia v. EPA, No. 20-1530, slip op. at 2 (U.S. June 30, 2022).
Biden v. Nebraska, 600 U.S. ___ (2023). Biden v. Nebraska, No. 22-506, slip op. (U.S. June 30, 2023).
Dames & Moore v. Regan, 453 U.S. 654, 672–74, 678–79 (1981).
United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 320–22 (1936); Regan v. Wald, 468 U.S. 222, 242–43 (1984).
Exec. Order No. 14,257, Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Trade Deficits, 90 Fed. Reg. 15,041 (Apr. 7, 2025).
Exec. Order No. 14,326, Further Modifying the Reciprocal Tariff Rates, 90 Fed. Reg. 37,963 (Aug. 6, 2025).
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635–38 (1952) (Robert H. Jackson, J., concurring).
Corder, Rob. “Patek Philippe hikes USA prices as Trump’s tariffs bite.” WatchPro, September 15, 2025. https://www.watchpro.com/patek-philippe-hikes-usa-prices-as-trumps-tariffs-bite/.
Hart, Jordan. “A ‘seismic’ 39% tariff on Switzerland is rocking the watch world, and even pre-owned Rolexes could see price hikes.” Business Insider, August 2, 2025. https://www.businessinsider.com/swiss-watch-market-39-tariff-rate-prices-2025-8.