Luxury had big ambitions for the US watch market in 2025. But after a roller coaster of on-again, off-again tariffs, these high hopes have proved more far fetched than hard luxury executives had anticipated. Now, the just implemented 39 per cent tariff on Swiss-made goods — one of the highest rates in the world — poses a major obstacle to US growth.
Even before they knew how high the tariffs would be, executives were concerned. In July, Bernard Arnault told The Wall Street Journal: “I’m pushing as much as I can for us to reach an agreement with the Americans, so that we don’t get caught up in a trade war, which would be extremely damaging for European businesses.” That same month, Richemont chair Johann Rupert assured investors that the company wouldn’t embark on steep price increases.
Nobody was expecting 39 per cent. On 5 August, Swiss federal president Karin Keller-Sutter travelled to Washington in a bid to negotiate the tariff down. She has reportedly since left Washington without a lower tariff agreement.
The US is the largest foreign market for Swiss watches, and accounts for 16.8 per cent of exports worth about CHF 4.4 billion ($5.5 billion), according to the Federation of the Swiss Watch Industry (Fédération de l’industrie horlogère suisse, FHS). It’s a major blow, says Oliver Müller, founder of watch industry consultancy LuxeConsult, particularly given the US helped to compensate for the Chinese market downturn post-Covid. “We will have to be even more active in other markets to promote and reconnect with younger demographics to compensate for the to-be-expected slowdown of the US market,” Müller says.
The watch industry is already in a slump: Swiss watch exports were down 9.7 per cent in May, and it was already bracing for high levies. On day two of Geneva’s Watches and Wonders trade show back in April, President Donald Trump announced a 31 per cent duty on Swiss imports. At the time, analysts said that this was “a disaster”, and worse than they had feared. That the final tariff, which entered effect on 7 August, is even higher, is yet another blow.
Analysts are unclear as to why the tariff is so much higher than anticipated. “No one would have predicted that Mr Trump would lash out at a country that has always massively invested in the US,” Müller says. “Even though we are a small country, we are the sixth biggest investor in the US and many Swiss companies are major job creators in the US.”
Brands have been preparing, says Bernstein luxury goods analyst Luca Solca. “Swiss watch companies had been shipping inventory in the expectation that tariffs would go up — even if the rate was [expected] to be somewhere around 20 per cent or so,” he says.
Prices will go up significantly. Solca anticipates increases in the high teens to low 20s to offset the 39 per cent tariff. “Significant, but not impossible,” he says. Müller anticipates increases of 12 to 14 per cent. Solca also expects that brands would adjust to lower volumes of watches going into the US.
All of this could inadvertently increase demand, thanks to a scarcity mindset that may well set in. Trang Trinh, who runs Girls O’Clock, a digital publication with a focus on luxury timepieces, also doesn’t think a price increase will scare off most first-time buyers. “In the short term, it may lower demand as consumers recalibrate their price expectations, but anyone eyeing a steel Bvlgari Serpenti, Cartier Tank, or Rolex Datejust is already in the luxury space, where decisions hinge on social signalling and demand stays relatively price-inelastic,” Trinh says. “I’m actually curious to see if the steeper price could even heighten the watch’s cultural cachet.”
Buyers and sellers are falling into two camps, she says. For consumers looking to buy ‘everyday luxury’ watches, they’re searching for pieces already inside the US, adds Trinh. These prices are already going up: “Many domestic dealers are marking up that duty-free pool as it grows scarcer and pricier.” The higher luxury end is a different story. “At the high-ticket end — where purchases were always bespoke, with travel, VAT refunds and hand-delivery baked in — collectors simply re-run the numbers, and if the new 39 per cent duty makes a six-figure watch more expensive here, they book the flight and bring it home themselves,” Trinh says. “Demand is still intact right now, the only question is how the extra cost will be divided between seller and buyer.”
Experts anticipate a temporary uptick in demand for pre-owned watches, but, Trinh cautions, this can only last so long. “Because the tariff is tied to provenance, any Swiss-made watch that crosses US customs — whether it left the factory yesterday or in 1994, whether from Geneva or Madrid — incurs the full duty,” she flags. This means that, on 7 August, Swiss-made watches already in the US became a “transient asset class” of their own, Trinh says, with owners having sudden liquidity. “However, once that reservoir has circulated a few times, secondary-market prices will move toward the duty-inflated cost of fresh imports and the initial rush will ease.”
If the duties don’t decrease, how long this rush lasts will depend on how brands approach their price increases — how much they absorb and how much they place on the US consumer.
Still, industry figures are holding out hope that this extra cost will fall lower than the current rate. “We are all keeping our fingers crossed in Switzerland that a last-minute deal could be found to avoid the draconian 39 per cent announced by President Trump,” Solca says.
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