Trump Threatens Swiss Watch Import Ban to Cut $40 Billion Trade Deficit

President Trump threatened to halt imports of Swiss watches, claiming the move could save the U.S. $40 billion and help balance the trade deficit. The threat comes as August trade data revealed imports reached $420.8 billion, the highest level since Trump’s tariff campaign began in April 2025, contradicting his administration’s goal of shrinking the trade gap.

Trump’s watch threat and the trade deficit problem

Trump said banning Swiss watches would help the U.S. achieve a balanced trade position. He claimed Switzerland is “elite” and suggested he could change that status. The U.S. trade deficit grew 13.7% to $105.6 billion from July to August, according to the Bureau of Economic Analysis. This is the widest gap since March 2025, when the deficit hit $140 billion.

Why tariffs haven’t closed the gap

Despite 17 months of tariffs, imports continue to surge. Economists attribute the growing deficit largely to the AI boom, which has created massive demand for overseas hardware. The Federal Reserve Bank of Minneapolis found that AI demand alone added $200 billion to the trade deficit in April. Capital goods imports remain at record highs, suggesting U.S. companies are investing heavily in foreign equipment.

What this means for Swiss exporters

Switzerland’s watch industry faces significant risk if Trump follows through on the threat. Trump said a ban would prevent Swiss watches from being imported, directly targeting one of Switzerland’s most prestigious export sectors. Swiss watches command premium prices globally, making them a visible target for Trump’s trade rhetoric.

The broader tariff strategy

Trump’s tariff policy, which began April 1, 2025, was designed to boost U.S. manufacturing jobs and generate revenue for redistribution. Instead, imports have rebounded to near-record levels. Exports grew only 2.2% to $205.7 billion in August, while imports jumped 4.3%, widening the gap further. Economists argue the trade deficit itself is not inherently harmful, particularly when driven by strong foreign investment in U.S. technology sectors.

Final Thoughts

Trump’s threat to ban Swiss watches reflects frustration with tariffs failing to shrink the trade deficit. With AI-driven import demand overwhelming policy efforts, the watch threat appears more political posturing than economic strategy, though Swiss exporters should monitor developments closely.

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