Swiss watchmakers are anxiously awaiting the outcome of ongoing US-Switzerland tariff negotiations, with the looming deadline of July 1 threatening to destabilize the global luxury watch market.
Unless a trade agreement is reached before then, Swiss exports to the United States will be hit with a significant 31 percent tariff, which could disrupt an industry already facing challenges.
Simon Lazurus, head of content at Chrono Hunter, warned that the tariffs would place the international watch trade in a “precarious position.” The fate of the industry now hinges on President Trump’s decision, which could see the tariffs reversed, paused for more than 90 days, or further escalated.
As the largest market for Swiss watches, the United States accounts for around 17 percent of total Swiss watch exports, making it a critical market. However, US trade relations with Switzerland have been tense. Last year, the US reported a CHF 38.5 billion (£33.9 billion) trade deficit with Switzerland, with President Trump singling out the European country as one of the worst offenders of unfair trade practices.
With demand in China waning and showing no signs of recovery, luxury watch brands have turned increasingly to the US to support sales. For the Watches of Switzerland Group (WOSG), a FTSE-250 company distributing luxury brands such as Rolex, Omega, and Patek Philippe, the US accounts for approximately 45 percent of demand. However, this crucial market has been under pressure, with the company’s share price plummeting by over 22 percent between April 2 and April 5. As of May 13, the stock remained down by eight percent from its April peak.
Analysts have noted that while luxury watch brands may have to increase prices to offset the tariffs, they may lack the leeway to do so. Lazurus remarked that post-pandemic demand had already pushed luxury watch prices three to four times above retail value, making the additional 30 percent tariff a difficult burden for both retailers and consumers to absorb.
Swiss Government Presses for Trade Agreement
Currently, Switzerland is at the forefront of trade discussions. US Treasury Secretary Scott Bessent highlighted that both the UK and Switzerland are prioritizing trade deals, with Switzerland moving quickly to negotiate an agreement.
On May 12, during a press conference in Geneva, Bessent acknowledged the rapid progress in talks with Switzerland. Swiss Finance Minister Karin Keller-Sutter, who holds the rotating presidency, confirmed that discussions have been positive, and progress has been made. However, she cautioned that it is still too early to declare a deal certain. Switzerland plans to propose a trade agreement within two weeks following talks with Bessent.
Shift to Pre-Owned Watches If Deal Fails
If a trade deal fails to materialize, Lazurus predicts a significant shift towards pre-owned luxury timepieces. As consumers seek to avoid the high prices of new imports, the pre-owned watch market could see a notable rise in demand. This trend is already in motion, driven by younger buyers and digital platforms that make rare or out-of-production models more accessible.
According to Deloitte, the pre-owned market is growing rapidly and is expected to match the size of the primary market within the next decade. Even established sellers like WOSG are diversifying into the pre-owned sector, with projections that their certified pre-owned revenue could reach £3.3 billion to £3.4 billion by 2028.
While the pre-owned market will continue to expand regardless of the tariff negotiations, a failure to reach a deal could accelerate its growth. For now, the watch industry watches closely as talks continue to unfold.
