It is rare for anybody in the watch business to break the code of silence and express how tough times can be, but the impact of President Donald Trump’s tariffs on American business has driven one of our premier luxury watch retailers to break cover as the chaos hits its customers.
Hing Wa Lee, Independent Watch Retailer of the Year at the 2024 WatchPro Awards, has three exceptional showrooms: one in central Los Angles and two in enclaves to the West (both among the largest multibrand stores in the country) where second- and third-generation Chinese Americans live, work and run their own enterprises.
This community has been hammered by Trump’s trade war with China, which has seen tariffs reach 145%; effectively ending imports from the country.
“Trump’s position is affecting the buying habits of our clients, certainly those that do business with China. I have a lot of friends who buy from China or have factories in China. Everything has stopped so of course they are worried with so much uncertainty and buying jewelry and watches are not top of their agendas right now,” says Hing Wa Lee CEO David Lee. “Overall, watch and jewelry sales are down.”
It is not just the Chinese American community suffering from the fall-out of the Liberation Day speech,” Mr Lee suggests. “What I see right now with the political situation and stock market prices going down, tariffs are causing panic,” he adds.
Recent financial reports from LVMH, Richemont and Swatch Group have shown how global economic headwinds have crimped sales, and the worst of the tempest has hit since the most recent quarterly updates.
At the same time, analysts like Morgan Stanley Research and anecdotal evidence from retailers speaking with WatchPro point to relentless market share gains by Rolex, Patek Philippe, Cartier and Audemars Piguet.
Hing Wa Lee is increasingly reliant on his two biggest brands as demand weakens across the rest of his broad portfolio.
“The only brand that is still strong is Rolex. We can still sell every watch that we receive because demand has been so much greater than the supply we had. We still do well with Cartier, but other brands are feeling less demand,” Mr Lee describes.
In addition to Rolex and Cartier, Hing Wa Lee sells Blancpain, Breguet, Roger Dubuis, Hublot, Ulysse Nardin, Girard-Perregaux, Zenith, Chopard, Breitling, Tudor, TAG Heuer, Tissot, Montblanc, Mido and Wolf.
Although he says he can still sell every Rolex he is allocated, Mr Lee says that demand has weakened for the brand. “Demand for Rolex has also dropped, but the drop still leaves demand higher than supply. Our other brands have really slowed down due to the tariff situation causing ripples across the economy. Interest rates have not come down, which is also not helpful for business. The stock market has gone down and tariffs have directly affected many people and is causing inflation to rise,” he analyses.
Ever the optimist, Mr Lee says he would still welcome any brands to contact him if they are interested in coming into his stores.
Hing Wa Lee is currently extending and remodelling its flagship showroom in the Greater Los Angles Walnut neighbourhood into a 30,000 square foot luxury watch megastore it will rename as The Mansion.
His optimism may also be steering his views on how far and for how long the American administration will go with its trade war.
“I do believe America will not allow Trump to go overboard. Congress will have something to say about the tariffs. Congress is giving the administration time to see if they can do any deals with other countries, but if they can’t it will step in, especially with China because too many people are being impacted,” he predicts.