Although the United Kingdom and the United States announced a new trade agreement aimed at reducing tariffs on specific imports, it appears to have fallen short of addressing the concerns of the UK's jewellery and watch businesses, which will continue to face a 10% levy on exports to the US.
The agreement will see the elimination of the 25% tariff on steel imports and a significant reduction in car export tariffs from 27.5% to 10%, aligning with a baseline levy previously established. In a reciprocal move, the deal also opens the UK market to US agricultural products for the first time.
The UK government has hailed the agreement as a significant win, projecting that it will safeguard thousands of jobs within the car and steel industries. However, the continued 10% tariff on all other UK exports to the US, including watches and jewellery, has left businesses in these sectors feeling largely excluded from the benefits.
For brands with international operations and retail partnerships in the US, the deal provides little comfort or protection against the existing tariffs. Watchmakers and jewellers now face the difficult decision of whether to absorb the additional cost of the tariffs, impacting their profit margins, or pass these costs on to consumers, potentially affecting sales.
Evidence of the impact of these tariffs is already emerging. The Swatch Group has reportedly increased its prices in the US by 7-10%, and while yet to be confirmed, Rolex is anticipated to raise its prices by around 3% next month. Interestingly, April saw an increase in watch sales, suggesting consumers may have been purchasing ahead of anticipated price hikes.
Pandora has already estimated a substantial annual impact of DKK 1.2 billion (£135 million) due to the tariffs.
The jewellery sector is actively lobbying for an industry-wide strategic exemption for natural diamonds. The World Diamond Council has issued an initial statement of support, backed by prominent organizations such as The World Federation of Diamond Bourses, the Antwerp World Diamond Center, the International Diamond Manufacturers Association, and the Gem and Jewellery Export Promotion Council of India.
Looking ahead, further discussions are anticipated between Prime Minister Kier Starmer and US counterparts, with a focus on potentially reducing the 10% baseline tariff that continues to affect various UK industries.
Speaking about the agreement, Prime Minister Starmer stated: "This historic trade deal delivers for British business and British workers. My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world."
Philip Carter for Rough&Polished from London
