Buying a Swiss Watch in America Is About to Get a Lot More Expensive
Story by Carol Ryan
America is still an emerging market when it comes to luxury watches. Now, tariffs could upset a rare bright spot for Swiss watch companies.
U.S. watch collectors are continuing to spend even as other nationalities pull back. Swatch, which owns brands such as Omega and Longines, said sales in America rose by “double digits” in the first half of the year. Sales of Richemont’s specialist watches, including Vacheron Constantin and IWC Schaffhausen, have increased more than 10% in the Americas region for three consecutive quarters.
U.S. imports of Swiss watches have been subject to a 10% baseline tariff since April. But in a new executive order late Thursday, President Trump raised that rate to 39%, even higher than the 31% levy initially threatened in April.
The rate could still be negotiated down or questioned by the courts. Implementation of the new tariffs was also delayed until August 7. But the trade war was already having an indirect impact on watch brands. The value of the Swiss franc has appreciated by 11% against the dollar this year as investors park money in safe havens. They have also piled into gold, which is up more than 25%.
This creates a triple whammy for American watch collectors. Today they pay 14% more for a yellow gold Rolex Daytona than they did in 2024. Watch brands had to raise prices on many models in the second quarter to prevent tariffs, costlier gold and currency fluctuations from eating into profit margins.
The price increases could dent demand in the industry’s hottest market. Watch exports to America have grown 14% annually since 2019, nearly three times faster than the global average. Booming stocks and cryptocurrencies are part of the story. But there is also untapped potential in the U.S.
According to Brian Duffy, chief executive officer of luxury retailer Watches of Switzerland, investment in U.S. watch retail infrastructure was neglected after the 2008-09 global financial crisis. Twenty years ago, Americans spent as much as the British on luxury watches per head. By 2016, this had fallen to 40% of the U.K.’s per capita spend, he says. The gap is closing again as watch brands upgrade their retail networks and offer better service.
Adding to the appeal of the U.S. market is that American watch collectors are about a decade younger than average. And there is a fanatical online community where watch fans parse complications and hunt down discontinued models. An unusually high share of U.S. sales come from serious watch connoisseurs: 45% of Watches of Switzerland’s U.S. sales, compared with only a quarter in the U.K.
Tariffs are only the latest challenge in a difficult decade for the Swiss watch industry. The value of Switzerland’s watch exports has increased a fifth since 2015. But look under the hood and the number of units exported has collapsed by 45%.
Swiss brands have lost market share since the launch of the Apple Watch a decade ago. The most pain has been felt in models that cost less than $625, where volumes have fallen nearly 60%, based on data from the Federation of the Swiss Watch Industry.
Sales of expensive models have held up much better, especially watches made by privately owned brands Rolex, Patek Philippe and Audemars Piguet that limit supply and have long waiting lists.
Weak demand from Chinese consumers has also hurt the industry. The U.S. overtook Hong Kong as the top destination for Swiss watch exports in 2020. Sales to Chinese shoppers slumped during the pandemic and never really recovered. But trends there were disappointing even before Covid 19—Beijing’s crackdown on gifting luxury goods to corrupt government officials began in 2012 and gradually crimped a booming market.
These trends have made Swiss watchmakers more dependent on the U.S. Brands hope Americans will swallow the tariff-related price rises and continue to spend. Swatch’s management told investors on its latest earnings call that U.S. consumers have been willing to accept the hikes so far because they consider the situation “homemade [by] the American government.”
But watchmakers have to tread carefully on price hikes because of the large and professional resale market. Almost a third of all global watch sales are preowned, according to WatchCharts, the highest share of any luxury goods.
The resale business hit an inflection point around 2017, when it became so big that it began to influence what happens in the primary market. Data from secondhand websites shows consumers which brands hold their value, so can boost sales of new watches that look like a good investment. But there are downsides: a readily available supply of cheaper preowned watches makes it riskier for watchmakers to raise prices in their own stores.
An analysis by Morgan Stanley and WatchCharts shows that demand for used watches is rising faster than for new watches. This is probably a sign that some shoppers are defecting to the resale market, where they think there is better value for money. Prices for secondhand watches have been falling for 13 consecutive quarters as supply has increased.
Watch stocks have been a very volatile investment. Swatch’s share price is down around 60% from where it was on the eve of the Apple Watch launch. Tariffs give investors another reason to bide their time before jumping back in.
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