Donald Trump pauses tariffs, but Swiss watchmakers still face a ticking crisis
Summary
Donald Trump’s 90-day tariff pause offers brief relief to Swiss watchmakers, but the luxury industry's lucrative US market remains under pressure from looming trade threats
On 9 April, Donald Trump backed down. Probably spooked by domestic stock market meltdown, the US president put a 90 day pause on his reciprocal tariffs plan. While this will help global trade avoid immediate disfunction, it is a threat that will not go away soon. This is truer than ever for Swiss watchmakers. After all, the Swiss watch industry has just gone through a traumatic week.
Between 1-7 April, Geneva was supposed to be abuzz with the world’s biggest annual watch fair—Watches and Wonders. And it indeed was, but not because of the Land-Dweller, the first new Rolex watch model in years, or the countless other new wristwatch launches from the who’s who of Swiss luxury watchmaking. It was abuzz instead with anxiety, growing to dread.
Donald Trump had declared ‘Liberation Day’, and tariffs and a growing fear of global trade wars the new normal. While trade turmoil between the US and China was to be expected, nobody expected neutral old Switzerland to get caught with a 31% tariff, on top of the universal 10% tariff.
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Watch publications, which are more comfortable publishing reviews of new releases, instead found themselves having to do some ground reportage on the state of the industry instead. Because it is a big deal—if the US does indeed carry through with the threat of 31% tariffs on Swiss products, then the Alpine country’s famed watch industry will be hit, and quite badly at that.
The economics of this is quite simple. Ever since the covid-19 pandemic, the US has become by far the biggest market for Swiss watches, across the spectrum from entry- and mid-level brands like Hamilton and Longines to über-luxury high horology like Rolex and Patek Philippe. Swiss watch industry figures bear this out quite strongly. Between 2022-2024, Swiss watch sales figures in the US rose from CHF 3,891million (about $4,546 million) to CHF 4,373 (about $5,109 million).
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Before the pandemic, much of the talk was about how China would develop into the largest market for Swiss watches, but sales there have actually declined significantly. While the US market share rose by 12.4% between 2022-24, China’s declined by 20.1%. Sales in the European and other Asian markets are decent, but US buyers now account for about 16.8% of all Swiss watch exports—that is about 1 in each 6 watches sold. According to recent research published by Switzerland’s Vontobel Group, the US market has accounted for 46% of the growth in Swiss watch exports between 2019-2023. Simply put, Swiss watchmakers need the US market, and the tariffs put a major spanner in the works.
There are many strange irrationalities to the entire Trump tariff plan, and for a country like Switzerland, it becomes more surreal. The main Swiss exports to the US are packaged pharmaceuticals and watches. For the latter, the US has next to no domestic industry. There are plenty of American micro-and boutique brands, for sure, but it’s not as if there’s a large scale manufacture of watch components (like cases or movements) in the US. Nearly all American watch brands use Swiss, Japanese and Chinese movements—both mechanical and quartz—for their watches, and the tariffs are going to harm them too.
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If the tariffs ever come, there are just a few options open for Swiss brands, none of them pleasant. One is to pass on the cost of the tariffs to American buyers, which means a massive hike in the retail price of watches in the US. Such an increase would almost certainly result in a precipitous fall in sales, not something the industry can afford. “It’s been tense. Some meetings with Americans have been cancelled. Sales will surely be down. The year ahead doesn’t look very promising for the watch industry," said Clement Fehrenbacher of Le Cercle des Horlogers to Reuters at Watches and Wonders.
The second option would be for brands to absorb the cost of the tariffs and watch already thin margins contract even further. While the likes of Audemars Piguet, Rolex and Patek Philippe could do so, at least for a while, a Hamilton, a Tissot, or even an Omega cannot. In fact, the Swatch Group, which owns brands across various price points, like Swatch, Omega, Tissot, Longines, Blancpain and Hamilton, among others, could see their bottom line being really squeezed by the tariffs. This is in large part because a decline in sales in China saw the group post a 14% decline in net sales in 2024.
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“Exclusive luxury brands such as Patek Philippe, Audemars Piguet and Richard Mille have little to worry about. They can reduce their (highly profitable) margins somewhat and pass on part of the increase in the selling price," watch industry specialist Pierre-Yves Donzé told Fortune. “On the other hand, it is a blow for mid-range or exclusive luxury brands, for which the selling price is a determining factor."
The final option would be to raise prices across geographies, either overtly or otherwise, and this would certainly not go down well with non-US markets. Whether Trump changes his stance again or not, it is clear that Switzerland’s storied brands need to re-think their strategy.
Handwound is a monthly column on watches and watchmaking.
