First Reactions From Watch Industry And End Consumers

On April 9th, tariffs on Swiss watch imports were implemented at a rate of 31%, while EU watch imports are subject to a 20% tariff. There is currently no clear guidance from the administration regarding the duration of these high tariff rates or their implications for affected countries. As a result, Swiss and EU watch manufacturers, U.S. distributors and retailers, as well as consumers are evaluating strategies to mitigate the impact of these tariffs.

According to Federation of Swiss Watch Industry FH, in 2024, U.S accounted for nearly 17% (CHF 4.4 billion) watch exports from the global Swiss watch exports worth CHF 26 billion. U.S. by far is the largest market for Swiss watches, with China in second place with 2 billion in exports and trending downwards. For the first two months of 2025, Swiss watch exports are down -2.4%, with the U.S. still maintaining the 17% share of overall exports.

Large luxury groups that own many prestigious watch brands have experienced negative stock performance. Year-to-Date (YTD) figures indicate that LVMH Group has declined by 21%, Swatch Group has decreased by 24%, and Richemont Group has seen a decline of nearly 8%. Publicly traded retailers have faired even worse, with Watches of Switzerland Group declining nearly 42% YTD.

Last week, I attended the largest watch trade fair in Geneva, where I spoke with leaders from watch companies, retailers, and collectors. Few were willing to share insights on their strategies for addressing the impact of tariffs. However, I managed to get first reactions from those willing to share. They requested to remain anonymous to avoid disclosing information about the Swiss Federation’s unified stance or revealing their wholesale and retail margins.

The CEO of a mid-size Swiss company outlined a two-part strategy to address tariffs. The tactical component involves shipping as much inventory as possible to U.S. retailers before the tariffs take effect, using a consignment model to reduce the financial burden on those retailers. The strategic component includes adjusting the U.S. price list by 10%, with the remaining cost being shared between the watch company and the retailers.

For instance, if the list price of a watch is USD 10,000, the wholesale price is USD 5,000. A 31% tariff is applied to the wholesale value, amounting to USD 1,550. This increase would raise the retail price by 15.5%, resulting in a new price of USD 13,100. However, if the Swiss watch company and the retailer absorb 5.5% of this cost (in some cases the watch company absorbs the entire amount), the final retail price for the consumer would be reduced to USD 11,000.

Christopher Ward, headquartered in the U.K, but manufactures watches in Switzerland, sells watches direct to consumers (DTC). Mike France, Co-Founder of Christopher Ward, made a public announcement that 31% tariffs will be added to orders shipped to customers within the U.S. He stated, “As a relatively small, independent watch brand we can’t afford to absorb this increase…..therefore, have no alternative but to pass the tariff costs onto our American customers.”

Rohan Parikh, a prominent collector, shared his strategies for addressing the current tariff situation. He indicated that he would travel to Switzerland to acquire his next significant piece and store it in a bonded warehouse or bank locker in Europe until the tariffs are lifted. Additionally, he expressed increased motivation to purchase watches at U.S. auctions, such as those held by Christie’s and Phillips, where he believes he can find advantageous deals on high-end watches, despite a 27% buyer’s premium. He concluded that these strategies benefit him compared to tariff-adjusted retail prices.

A Texas-based retailer tells me that he believes in the policy of current administration. However, the watch retail sector has been facing challenges recently, and the implementation of tariffs is expected to exacerbate these difficulties. As a result, adjustments to watch prices may be necessary in many cases. If profit margins are partially absorbed, the retailer may have reconsider offering discounts to customers. He says overall, it is a bad situation all the way around, but he has managed to survive crisis in the past as well.

During a coffee meeting with a friend from Austin, who is a casual watch enthusiast, summarizes an average buyer’s sentiment, “The way things are headed, what difference does tariff make on any luxury watch? The era of discretionary income and excessive spending on luxury goods seems to be coming to an end.”