Trump’s 39% Tariffs Have Rattled the Swiss Watch Industry

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Back in early April, when President Trump first announced his reciprocal tariffs—including a 31 percent levy on Swiss goods—the Swiss watch industry, which had gathered in Geneva for Watches and Wonders, went into a collective state of panic.

“We were like, 31 percent—this completely changes the business and how we’re supposed to operate,” Chris Daaboul, founder of EsperLuxe, a high-end watch retailer in Boston that specializes in independent watchmakers, tells Robb Report. “If the market survives that kind of pricing.”

During the 90-day pause that followed (with a temporary 10 percent tariff in place), brands, retailers and dealers grappled with how to handle the tariffs and what they would mean for consumers in America, the Swiss watch industry’s No. 1 market. “Some brands changed prices and gave retailers some margin, especially those importing product directly,” Daaboul says. “Others that had multiple layers of distribution—such as a U.S. subsidiary—were able to spread the cost and absorb it. But with some watchmakers, we didn’t have a choice and we had to pass it on.”

On Aug. 1, the industry got an even bigger jolt when Trump announced that not only was Switzerland not getting a reprieve, the goods it exports to the U.S.—including watches—would now be subject to a 39 percent tariff, among the highest tariff rates in the world.

Due to go into effect on Aug. 7, the new tariff has thrown the trade into crisis mode, especially in light of the other market forces complicating the industry. “The dollar is weak, the Swiss franc is high and gold is at an all-time high so it’s kind of like the perfect storm,” Steven Holtzman, vice chairman at CD Peacock in Chicago, says. “Prices have gone up, margins have gone down. I don’t think it’s good for anybody.”

Holtzman speculated that if the 39 percent tariff sticks, brands might, for the time being, choose to bypass the American market altogether: “Being that allocations and supplies are decided by the brands themselves, if the U.S. is not in a position to sell more goods, they could sell the goods in other countries, and either increase or decrease allocations.”

Dealers in the secondary market also predicted a tightening of supplies, especially when it comes to the industry’s undisputed juggernaut. “Rolex has always been a symbol of style and quality, and over the last five years it’s been a symbol of scarcity,” Paul Altieri, founder and CEO of the pre-owned dealer Bob’s Watches, says. “It’s only getting worse. Supply is going to be more constrained.”

In the short term, secondary dealers say that the uncertainty over buying watches through primary channels is likely to benefit the pre-owned category. “With a tariff in place, our listing looks a lot better,” Joshua Ganjei, CEO of the European Watch Company, says. “I don’t have to deal with the import, I don’t have to deal with the duties. ‘What if the price changes to 39 percent overnight while it’s in transit to me?’ These are all the questions that don’t have answers. If you buy directly from us, you get it tomorrow, there’s no other story.”

But if tariffs inflate prices and continue to constrain supplies, the pre-owned market will feel the burn eventually, says Eugene Tutunikov, CEO of SwissWatchExpo, a secondhand dealer in Atlanta. “So far, tariffs have been a blessing,” he says. “And for the next one to three months, they’ll be a net positive. But if they stay in place for six months, it will make it difficult for us to acquire inventory and consumers will have less demand at higher prices.

“This is going to spur a lot of luxury watch buyers to go on vacation,” he adds. “Seriously, I think people will say, ‘I wanted this watch and now I’ll buy it in Paris. And their savings will pay for their flight and hotel and they get to have a nice trip.”

The big question, says Daaboul, “is what’s the pain threshold on prices? And what happens if the stock market slows down, crypto slows and demand is impacted? These are all things that keep me up at night. When the 10 percent tariff was in play, we managed it, between brands and consumers, and spread that across the board. But 39 percent? There’s only so much you can bury. Prices inevitably have to go up.”